The most important trend in managing the cost of drug benefit plans

Ironically, the current expenditure for the average plan on expensive biological drugs that treat catastrophic conditions is 10% to11% of spending. This change alone would allow the average plan to cover the costs of their entire specialty drug budget.

This is a win-win for all: pharmacy chains can start inking agreements that go beyond simply capping dispensing fees, and allow for sustainable patient care, while at the same time opening up the door for more business. Plan sponsors for their part would reap meaningful savings, and plan members have a properly managed benefit that can afford the catastrophic drugs for conditions like cancer, MS and rheumatoid arthritis.

This is starting to happen now and it’s gaining momentum, which is encouraging to see. It’s great to see key stakeholder groups that appreciate and understand the big picture.

A Word of Caution
For those stakeholders in Canada who refuse to accept the new reality of delivering prescription drug benefits to Canadians with private plan coverage, consider this: last week, a large U.S. wholesaler bought Burlington, On.-based Innomar Strategies, a specialty pharmaceutical products management company for $15 million in cash, subject to a working capital adjustment. Anyone who doesn’t think things are changing, and will continue to change, needs only pay attention to how our pharmacy marketplace is growing more attractive to large, international players who see enormous opportunity.

Canadians in places like Manitoba made fortunes selling lower-cost brand name drugs to Americans without healthcare coverage in the “internet pharmacy” glory days earlier this decade. If Canadians are paying 10-20 times more for the same generic drug north of the border, does anyone think for one minute that is going to last?

Mike Sullivan is President of Cubic Health Inc.

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