With drug costs for plan sponsors steadily rising in recent years, keeping budgets down is top of mind as they plan for 2021.
“The biggest concern for plan sponsors is sustainability,” said Shawn O’Brien, principal of data enablement and drug, health, dental product roadmap for Telus Health, in a press release. “They have to find a way to provide a competitive benefits offering to employees, while at the same time containing costs. It’s a balancing act.”
Read: Mental-health conditions, specialty meds driving drug plan cost increases in 2019: report
This summer, Telus revealed average eligible costs for private drugs grew more quickly in 2019 than in any of the four previous years, increasing by 7.6 per cent. This was mainly due to a jump in the use and cost of specialty drugs, an increase in younger Canadians using medication for mental-health challenges and the rollback of the OHIP+ program. However, employers can use cost-containment strategies to help drive down the price of drugs while keeping comprehensive health plans available to their members, according to a new report by Telus Health.
One of the cost-cutting strategies suggested by the digital health-care provider is leveraging basic plan design features, such as mandatory generic substitutions to replace name-brand drugs or limiting claim payments to solely the cost of generic brands. In fact, many carriers include mandatory generic substitutions as the default, which is driving a trend that saw generics account for 63 per cent of private drug-plan prescriptions in 2019, up from 58 per cent in 2015, according to the report.
In circumstances where medications don’t have a generic substitute, the report said plan sponsors can instruct their drug programs to cut back the cost or replace it with a lower-cost branded drug option that provides equivalent efficacy. Step therapy is another option that helps ensure plan members try lower-cost alternatives before moving up to higher-cost medications. Telus Health also advised managed formularies to ensure new drugs go through an independent cost-benefit analysis after Health Canada approves them and before they’re added to a plan formulary.
Read: How will OHIP+ rollback affect plan sponsors?
Another strategy the digital health-care provider recommended is for plan sponsors to address specialty drug costs. “There are fewer people taking specialty drugs than traditional drugs because they treat more rare diseases, but still they account for more than 30 per cent of total drug-plan spending now, based on our book of business,” said O’Brien.
From 2018 to 2019, the average eligible monthly costs of traditional (non-specialty) drugs for those aged 25 to 64 who are insured rose by 2.9 per cent, the report noted. That same measure rose by 10.1 per cent for specialty drugs (including biologics), costing $10,000 or more per year, per claimant.
Telus Health also suggested plan sponsors consider the use of prior authorization, which allows managed formularies to review whether members meet specific clinical guidelines before a specialty drug prescription is filled. Electronic prior authorization is the next logical step, the report said, as it offers greater efficiency and the potential for more timely access to drugs and reduced barriers to access.
Read: A legislative update on provincial biosimilar policies
The report noted plan sponsors may also want to substitute biosimilars in place of high-cost biologics that don’t have generic equivalents. However, for this swap to work, references must store information about each claimant’s condition, as a biologic may be used to treat multiple conditions while a biosimilar may only be approved to treat one. It also pointed to product listing agreements as a way to reduce the cost of drugs at the point of sale.
The company also encouraged plan sponsors to support medication adherence, as plan members don’t get the full benefit of improperly-taken medications and may need more drug support over the long term if they don’t keep their conditions under control. Telus Health found non-adherence (measured based on whether claimants refill their prescriptions on time) was high in three categories: diabetes (24.8 per cent), depression (23.0 per cent) and cardiovascular conditions (16.2 per cent), including high blood pressure and high cholesterol. Together, they account for 28 per cent of eligible drug costs.
To support medication adherence, the report encouraged plan sponsors to provide members with access to online applications that deliver daily medication reminders and send alerts when a prescription is due to be refilled or that can arrange for renewals to be automatically dispensed. It also noted apps can make it easy to connect to a social worker, psychologist or psychotherapist and schedule a virtual appointment, which can be essential to support adherence for people with mental-health conditions.
Read: Drug adherence an increasing issue for plan members, sponsors, finds survey