Drug plan costs are an ongoing concern for Canadian employers. Benefits Canada’s Face to Face Drug Plan Management Forum in Vancouver shows how plan sponsors out west are managing them.
Despite concerns about the growth in biologic drug costs, Pacific Blue Cross data from 2006 to 2012 indicate that the cost growth of the top five biologics is slowing down, according to Joanne Jung, director, pharmacy services, with Pacific Blue Cross.
One of the possible reasons for this trend, Jung explained, is that, “for diseases like rheumatoid arthritis, the market is almost saturated. Any patient who is eligible for a biologic is likely on one; there might just be movement from one agent to another. However, if a new medication enters the market, the existing population is shared among more competitors.”
Jung also noted that private drug plan costs and the growth of biologic drugs might be lower in B.C. because PharmaCare picks up many of the biologic drug costs (see “How BC PharmaCare Works” below).
In B.C., generic drugs covered by PharmaCare are currently priced at 25% of the brand price, compared with up to 65% in recent years. Next year, they will be reduced to 20% of the brand price, and the Pan-Canadian Drug Pricing Alliance recently lowered the top six generic drug prices to 18% of the brand.
“Now, more than ever, it makes sense for plan sponsors to have a lower-cost alternative or generic drug plan in place to take advantage of the lower generic pricing,” said Jung. Unfortunately, these lower prices don’t apply to generic drugs that are not listed (or regulated) by PharmaCare—which, according to Jung, “can be priced significantly higher, at 50% to 90% of the brand price.” For example, esomeprazole, the generic of Nexium, is not listed on the BC PharmaCare formulary and is priced at 85% of the brand name drug.
The PharmaCare Model
Several large B.C. public sector unionized plans have recently bargained new drug plans that mimic BC PharmaCare coverage. While the net impact will take some time to assess, there are some considerations for plan sponsors contemplating similar changes.
Although moving to a drug plan similar to BC PharmaCare may appear to save costs, there can be unintended short- and long-term consequences. For example, there are a number of drugs (e.g., most of the newer, longer-acting drugs for ADHD) that a traditional benefits plan would cover that would not be eligible under a plan that mimics BC PharmaCare.
In addition, some drugs are available only to patients who meet specific criteria—or “special authority”—requiring the plan member’s doctor to fill out a form to apply for coverage. PharmaCare will notify the plan member’s doctor of the decision in writing, so members need to request a copy of the decision document from their doctor and submit it to their insurance carrier to verify that PharmaCare has approved them for coverage.
If plan members have had private drug plan coverage for a long time, they may never have applied to PharmaCare for special authority for the drug they are taking. But if their private plan moves to mimic PharmaCare coverage, members will have to be approved by PharmaCare in order for their private plan to continue to cover the drug. In some cases, PharmaCare may require a patient to try several different medication options in a specified order before they are eligible for coverage. For some patients, this could mean going off a therapy that they have been stabilized on for some years, which could jeopardize their health.
Plan sponsors that are transitioning to a drug plan that mimics BC PharmaCare can elect to grandfather current coverage for members whose drugs may not be covered or require special authority. This reduces disruption for plan members; however, it will also reduce the potential drug plan savings.
BC PharmaCare also advocates reference-based pricing or maximum allowable cost for certain categories of drugs. In these classes, the payer chooses the least expensive drug in the drug class as the reference product; all other drugs in the class will be reimbursed according to the reference drug price. This often results in the plan member receiving the reference or lowest cost medication.
However, the premise for this type of drug plan management assumes that all drugs are therapeutically equivalent or provide the same benefit. “Although they may be structurally the same and have the same mechanism of action, there are not many head-to-head comparisons since most clinical trials compare new drugs to a placebo,” Jung explained. “Many drugs have different side effect profiles or drug interactions, which is why a variety of patient treatment options may be required in certain cases.”
If patients are not getting the drug they need or are facing side effects, “they may choose not to take their medication—often without notifying their physician—which can result in more serious long-term health issues that can have significant impact on the private plan, the healthcare system and the plan member’s health and productivity,” she added.
One key message, Jung said, is that plan sponsors need to look at the big picture and analyze their individual plan usage to determine the potential impact of plan design changes on members.
Data Driven
Cost is always top of mind for private drug plan sponsors, but analyzing data and complex plan designs is challenging. For example, current underwriting models don’t demonstrate how drug expenditures offset other costs for plan sponsors. “The group benefits industry has not done a good job of connecting the dots with the data we have,” said David Willows, vice-president, strategic market solutions, with Green Shield Canada.
According to Wayne Millar, assistant vice-president, product development, group benefits, with Sun Life Assurance Company of Canada, many traditional health claim forms collect member consent for underwriting, administrative and claim adjudication purposes only. This consent does not permit the insurer to use the personally identifiable claim information for predictive modelling and intervention at an individual level. Millar proposed that getting this permission would require a change among most group insurers in order to mine the data at an individual level.
In addition to using the data to determine the return on investment of the drug spend, Millar suggested that it is also an opportunity to begin predictive modelling. “With their specific consent, we could analyze data to identify members who are at higher risk of select health outcomes and, with the help of medical professionals, engage those plan members with interventions to help them remain healthy.”
Design Dilemmas
Plan sponsors also need to be clear about what they want from their investment in a drug plan, explained Paul Mochrie, general manager, HR, with the City of Vancouver. “Is it about health or attraction and retention? The decision is not whether they want a drug plan, but rather what kind of plan design [they need]. They have to determine the health impact and the return on investment on changes they make to their drug plan.”
As in the rest of Canada, B.C. pharmacists have been granted an expanded scope of practice. According to Tanya Hogan, director, health solutions and pharmacy projects, with Shoppers Drug Mart, pharmacies are looking to provide programs that can reduce the burden and costs on the overall healthcare system. In B.C., Ontario, Alberta, New Brunswick and Nova Scotia, for example, pharmacists can provide flu shots in a pharmacy setting. The City of Vancouver has moved away from in-house flu clinics for its staff. “We have chosen to reimburse them to go to the pharmacy to get [the] shot—which is more convenient for the employee, more cost-effective for the employer and just as effective as an outcome,” said Mochrie.
Still, with increasingly complex drug plan designs, do sponsors truly understand how these new programs work and the impact they have on their plans and members? “Although plan sponsor awareness has been growing over the last few years, the issues are very complex, and we still have a long way to go,” Mochrie noted. “Plan sponsors need to understand the impact of the changes before implementing them. Unions in B.C. that are negotiating and considering managed plans, which limit access to some medications, also need to get up to speed.” “Evaluation is key,” concurred Frederic Lavoie, director, patient access, with Pfizer Canada, adding that plan sponsors need to have an understanding of the impact of the designs on costs and outcomes.
But according to Willows, many plan sponsors spend very little time every year thinking about drugs. “The most time is spent when they are reviewing their plan every few years or during the annual renewal. Often, we only get into in-depth discussions when things are not going well.”
It can be confusing for patients, caregivers and medical teams to understand drug coverage. Pharmacists can help, said Dr. John Wade, a clinical rheumatologist in Vancouver, and pharmaceutical companies can fill a huge need with their patient assistance programs to help patients navigate their public and private drug coverage.
“Unfortunately, pharmacists receive limited information via their point-of-sale drug claim adjudication system,” noted Hogan. “Pharmacists are only told ‘DIN not covered,’ and they are not informed if there is an alternative or preferred drug.”
Fortunately, with a growing number of online and mobile tools—such as DrugCoverage.ca, which can be used to search for a drug to determine government and private coverage or find information on available patient assistance programs—pharmacists and plan members have greater access to the information they need to navigate increasingly complex drug plan designs.
Good Medicine
Four key take-aways for drug plan sponsors
- Have clear objectives for your drug plan and understand the impact of plan changes beyond simply cost management.
- Look for partnering opportunities to analyze data in order to better understand the value of drug benefits, and consider predictive modelling to identify health issues proactively.
- Consider how pharmacists’ expanded scope of practice can save costs and offer greater convenience to plan members.
- Make plan members aware of the tools and services available to help them navigate their coverage.
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