Solutions to rising drug costs

Sick? Take a pill…or several. Canadians rely on medication to make them well when they are ill—and, for some people, to stay healthy. The medical system in Canada is treatment-based rather than preventative—the fact that full medical exams for healthy adults are no longer covered by OHIP reinforces that model. Employee benefits plans often follow this path as well and, ultimately, pay the price.

According to data from the Canadian Institute for Health Information, in 2010, total drug expenditure is estimated to have reached $31.1 billion. This is a 4.8% increase since 2009. While average drug expenditures slowed in the last five years, costs are still rising. As more therapies become available, plan sponsors struggle to stick to a budget that is fair to both their bottom lines and their plan members.

At the Face to Face: Drug Plan Management conference, hosted by Benefits Canada in early December 2012, presenters and attendees discussed solutions to the troubling and sensitive matter of drug costs.

Through presentations and the panel discussion, it became obvious that plan sponsors can’t tackle this matter on their own. The solution to the problem of long-term sustainability of employer-sponsored drug plans has to go beyond simply implementing co-pays, drug formularies and pre-authorization.

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In the past, the creation-to-delivery course for drugs followed this order: manufacturers made the drugs, doctors prescribed them, pharmacies delivered them and private plans paid for them. Ben Harrison, manager, group strategic relationships, with Great-West Life, says that this outdated method needs to change.

“When we start getting into discussions about sustainability and managing costs, the reality is, that model can’t work,” Harrison said. “Opportunities for better drug plan management can be leveraged through more interactions, more collaboration and more working relationships with the various stakeholders. Pharmacy, in my opinion, is the first piece of the equation.”

Preferred provider networks between pharmacies and insurers represent an important stepping stone in efforts to build more in-depth relationships. “Developing a relationship based solely on price won’t, in the long term, deliver the best solution,” he explained. Disease state management and drug adherence programs are services that pharmacists can provide that would have a huge impact on plan member health.

Unfortunately, the finer details of how to compensate pharmacists for offering these services on a regular basis need to be worked out. “To take the time to help someone manage their diabetes properly is a costly service. Pharmacists’ time is expensive.”

Relationships with physicians is another important but not yet well-established area that needs attention. “How can benefits administrators work more closely with doctors to help support treatment programs?” asked Harrison. Such relationships would ensure that benefits programs and the administration process were in line with the best practices of doctors and specialists. “Physicians play an important role in drug plan management, whether they realize it or not,” he said.

While a good start, these types of partnerships are just the tip of the drug plan management iceberg, said Denis Morrice, operations committee member with Best Medicines Coalition.

Morrice wants the government to enhance its involvement in drug coverage and advocates for a full national pharmacare program to be part of the Canada Health Act. Doing so would address many of the roadblocks that patients experience when trying to access medication—particularly high-cost therapies. “Studies state that prescription drugs are as important as hospitals and physician services,” he said. “We don’t refuse people surgery or a blood transfusion, so why deny patients their medication?”

Representing the patient perspective, Morrice strongly believes that denying medications is the ultimate result of the cost-saving mechanisms that are put into place in drug plans.

“Drug costs and sustainability are used as a scapegoat for cost saving and efficiency in the system as private payers are introducing costly bureaucratic programs, hiring case managers, advisors and consultants, and introducing more forms that add additional costs,” he said. “These systems are undermining good healthcare. Every time a doctor fills out unnecessary insurance papers, it is another patient not being seen at a time when waiting times are growing, resulting in a further increase in doctor and hospital visits as well as short- and long-term disability increases.”

Morrice knows that rewriting the Canada Health Act is not a simple process but said that “it’s one that must happen.”

But such a bold move is likely a far-off dream, and plan sponsors need solutions now. So what can be done?

“A positive step forward would be for the four key stakeholders—governments, private payers, medical associations and patient groups—to squarely and honestly address the access to medication issues,” Morrice said.

Drug plan management can be a murky issue. Everyone wants what’s best, but what’s best for employers often isn’t what’s best for plan members or other key stakeholders. What is clear is that all players recognize that change needs to take place. What that change will look like will depend on who’s passionate enough to get involved.

April Scott-Clarke is associate editor,

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