What happens in a world where a drug identification number can mean two very different things, depending on the product?
Most drug plans have contract wording that resembles the following: “Drugs covered under this plan must have a DIN in order to be eligible and meet the following criteria: drugs legally requiring a prescription; life-sustaining drugs that may not legally require a prescription; compounded preparations, provided the principle active ingredient is an eligible expense and has a DIN.” And then, depending on the plan, the language may include some coverage parameters for areas such as vaccines, fertility medications, intrauterine devices, drugs for sexual dysfunction and colostomy and diabetic supplies.
Regardless of the wording, the DIN is at the core. If a drug has a DIN, there’s a very good chance it’s eligible unless it helps you grow hair, reduce wrinkles, lose or gain weight or needs to be administered in the confines of your local hospital.
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Once upon a time, drug plans took a DIN at face value. The prevailing sentiment was (and remains) that if Health Canada approved it for sale, who are we to say it shouldn’t be on a plan? A DIN provides a manufacturer with the authorization to market a product following a review of the formulation, labeling and indications for use. It’s Health Canada’s way of saying it thinks the product is safe and it’s willing to let Canadian consumers have access to it.
Let’s look at two scenarios: one for a blood pressure medication and another for a rare genetic disorder. If a particular manufacturer wants to bring another blood pressure medication to market, it will have to be ready to jump through some major hoops. There are already dozens of blood pressure medications on the market. If the manufacturer wants to add its product to the list, it needs to prove:
- Efficacy: The medication works at materially lowering blood pressure. Since we have access to many drugs that can already do that, so if this product can’t, Health Canada won’t approve it.
- Safety: It won’t harm a patient if used appropriately.
- Quality: It must manufacture the product in a manner that’s acceptable to allow for sale to Canadians.
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Now consider a drug that treats one out of every 20,000 or so people in Canada who suffer from a serious and rare genetic disorder. Going even further, consider that there are no other therapies on the market to treat that rare disorder. What happens now?
Health Canada has to use a very different lens to assess this situation. The product absolutely must be safe and demonstrate appropriate standards of quality, but what about efficacy? What happens if this drug seems to have some modest improvement over the placebo but doesn’t yet have any evidence of clinical effectiveness? In other words, the modest improvements don’t translate into a measurable clinical benefit.
So what do you do if you’re Health Canada? There isn’t anything else here to choose from and the product, which is from a reputable pharmaceutical company that’s trying its best to move the needle in treating a rare disease, isn’t going to harm patients.
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What we’re seeing more today than ever before is that Health Canada is questioning whether there’s a downside to approving the medication and giving it a DIN. In fairness, it’s hard to argue that logic. These are incredibly intelligent and well-trained scientists and experts rendering these very legitimate decisions.
So out comes a DIN for the new product. It can cost as much as $280,000 per year once the pharmacy adds its markup for dispensing the tablet. You can bet, however, that no provincial drug plan is going to touch the product at a cost of $280,000 with no evidence of any clinical benefit.
What about its inclusion in a private plan?
Why not? It has a DIN. There’s no specific exclusion, and it has a Heath Canada-approved indication to treat a particular condition. The plan member has that condition. So what’s the issue?
That’s exactly what happened to a plan sponsor I spoke to this month. It’s now on the hook for the cost of the medication indefinitely, as long as the member remains on the plan.
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Is that right or wrong? That’s not the issue. If a plan can afford $280,000 and wants to cover the drug, that’s fantastic. However, how realistic is that for most administrative services-only plans? Keep in mind that we’re talking about a product that, to date, has failed to demonstrate any clinical benefit. You can’t fault the manufacturer. Maybe it’ll hit a breakthrough some day in this area and if it wants to charge $250,000 per year, that’s its business to do so. If the pharmacy wants to add $30,000 in markups to dispense the drug, that’s its business to do so as well. And you can’t fault Health Canada. Why wouldn’t it allow the drug on the market? It doesn’t care who pays. That’s not its job.
If a plan sponsor isn’t revisiting its plan contract language and determining its philosophy around coverage, it can’t be surprised to wake up some day to a situation like this one. Given that potential outcome, it’s worth dusting off the contract language from the typewriter era and having a discussion about the approach in the future.