A large plan sponsor with both active and retiree drug coverage faces a serious threat. The plan is already dealing with 32% of its more than $10 million in annual drug plan spending being diverted to a small number of expensive specialty drug claims. That figure was below 14% of plan spending less than five years ago. Nearly 80% of the specialty drug spending is being allocated to chronic therapies, therefore the plan can expect the vast majority of the claims to reoccur every year.

Later this year, the financial storm clouds will start to get darker over the plan as the next generation of therapies for chronic hepatitis C (CHC) enter the market in Canada. What makes the wonderful advances in CHC therapies a profound financial concern for this plan sponsor is the following: Based on the company’s claiming population profile, there may be as many as 158 CHC claimants within its plan.

The new all-oral treatment regimens for CHC that are expected to be approved later this year are nothing short of miraculous. It was not long ago that a CHC patient who considered therapy was staring down the barrel of a year of gruelling interferon and ribavirin therapy. It was akin to giving yourself a serious flu for an entire year: The side effects of this combination are debilitating with cure rates hovering between 40% and 50%. There have been some remarkable innovations in treatment options for CHC that have since arrived to the market, but later this year, we are looking at all-oral treatment regimens that will be available. These treatments can be as short as eight to 12 weeks in duration, are much better tolerated than earlier generations of therapies, and have the ability to drive cure rates of 95% and higher.

Imagine that in eight to 12 weeks, CHC can be cured in 95% or more of patients using a well-tolerated, oral regimen. It’s a remarkable mark of progress in science, the kind of innovation that we have a tendency to take for granted so soon after it’s available.

Back to the plan sponsor and its potential population of 158 CHC claimants—what does this mean for the plan? It’s estimated the cost to treat CHC with these new regimens will be about $90,000. Sure, the upside is that this is a one-time therapy, but if this plan is looking at layering on additional $90,000 treatment courses on top of its existing specialty experience, what is this going to mean to the financial sustainability of the plan?

Some may look at that 158 claimant figure skeptically and suggest that in reality it is likely the prevalence of CHC in this population is far lower. While that may be the case, the 158 claimants figure is based on data from the Public Health Agency of Canada and the actual claims experience of the plan.

Others might suggest the following:

  • A large number of CHC patients in Canada are unaware they have CHC
  • Some CHC patients will not require treatment
  • The current treatment rates for CHC patients are very low, so that will materially impact the number of the 158 claimants who move forward with therapy

These points are all valid, however, are they still relevant once the calendar flips to 2015?

If specialists have been waiting for these game-changing therapies to get to market before initiating treatment, what will this do to treatment rates? Given that we have cures for CHC that be achieved within 12 weeks, how will this increase the testing and diagnosis of CHC going forward? How are treatment rates from years ago relevant when we are dealing with a completely different universe of therapies?

My neighbour growing up contracted CHC from a blood transfusion as a young child. As a pharmacist and knowing something about interferon and ribavirin therapy, I could understand why he was never eager to initiate therapy. Don’t you think he would jump at the chance today to treat his condition with what’s in the pipeline?

This is going to become a very controversial and complicated area moving forward. Ironically for the pharmaceutical companies that have pioneered these incredible innovations, their biggest problem may turn out to be that they have found a cure. CHC is a very slow-progressing condition for most patients. Many patients don’t have any symptoms, and while up to 25% of patients can develop liver cirrhosis from CHC, that process often takes 25 to 30 years to occur.

There is no question CHC is an important public health concern. There are serious costs to the healthcare system in treating complications from liver disease, and given that CHC is a leading cause of liver transplantation, the costs to the healthcare system are material. A cure benefits the public system tremendously. However, what is the benefit to an employer that is on the hook for a $90,000 claim? CHC does not lead to extended disability leaves and frequent absences from work. CHC does not render patients unable to work and be productive. The vast majority of the tangible financial benefits to curing CHC accrue to the public system years after a member has left the workforce.

The fact that we have a cure for CHC would appear to make this more of a public health issue than an employer health issue. Let’s go back to our plan sponsor one more time. If we conservatively say that only 10% of the estimated CHC population within the plan actually has the condition and initiates therapy, the plan is looking at nearly $1.5 million in drug costs for these 16 patients. What a nice gift to the healthcare system to cover the cost of CHC therapy for these members so that the public purse doesn’t need to pay for the cure or the related healthcare costs down the road of not curing the disease.

When you consider that approximately 250,000 Canadians (primarily baby boomers) are thought to have CHC, I wonder if our provincial governments have the stomach to absorb the billions of dollars it will cost to treat these patients?

The question for plan sponsors is whether or not they feel CHC is their battle to fight. It may seem like a callous question to ask, but when you are already dealing with 32% of your plan spending for existing specialty therapies, it’s a reasonable one to reflect on.

The great irony here is that the fact that we are dealing with a cure is actually a problem. Our existing model of private drug coverage for working-aged Canadians has been built primarily on treating chronic conditions and keeping employees healthy, productive and at work. We haven’t spent much time considering cures. It would be great to see CHC kick-start a conversation between plan sponsors and governments around the provision of tax credits for proactive investments by plan sponsors in member health. These investments don’t need to be limited to prescription drugs, but an area like CHC would be a great place to start.

Wouldn’t that be a legitimate win-win in this area? A member can get access to a cure early in the disease progression, a plan sponsor can assist members by providing an incredibly important benefit, the healthcare system can save significantly moving forward, and employers that cover these therapies can become eligible for tax credits to reduce the financial burden. It would be great to see this kind of innovation take off to match the innovation these therapies represent.

Mike Sullivan Mike Sullivan is president of Cubic Health, an analytics and drug plan management company based in Toronto. These are the views of the author and not necessarily those of Benefits Canada.
Copyright © 2021 Transcontinental Media G.P. Originally published on benefitscanada.com

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