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While preferred pharmacy networks have been around for nearly a decade, most benefits plan members aren’t aware that these arrangements have become standard, says Suzanne Lepage, a private health plan strategist.

Preferred provider networks are common arrangements that businesses across a variety of industries enter into to help deliver consistent value, quality and cost containment, said the Canadian Life and Health Insurance Association Inc. in an email to Benefits Canada. “For insurance companies, this often means partnering with providers to support the overall health and well-being of plan members.”

Read: Manulife, Loblaw deal to deliver specialty drugs sparks access, competition concerns

Indeed, before Manulife Financial Corp. announced it was entering into an exclusive partnership with Loblaw Cos. Ltd. to deliver a specialty drug care program through Loblaw’s Shoppers Drug Mart, it had a similar partnership with Bayshore HealthCare Ltd. since 2014. And, in November 2022, the insurer announced it was moving to a hybrid preferred pharmacy network that included both Bayshore and Shoppers Drug Mart.

After backlash from the public, Manulife reversed its decision to partner exclusively with Loblaw’s Shoppers Drug Mart on providing specialty drugs. In a statement on its website, the insurer said it’s making an update “so that Canadians supported by Manulife who take specialty medications to treat serious, chronic and often life-threatening conditions will be able to fill their prescriptions at any pharmacy of their choice.”

“Through preferred providers, protocols are established to ensure a high standard of care is consistently met at lower costs — a benefit that is passed on to both employers and Canadians,” said the CLHIA. “This is important, particularly as costs for medications continue to increase in Canada, especially for specialty drugs.”

Read: How preferred pharmacy networks can lower drug plan costs, boost access to care

Pharmacies and insurance companies first entered into these agreements to help with operational aspects and patient navigation, says Christine Than, assistant vice-president and pharmacy lead of health solutions at Aon.

When PPN agreements were first introduced, they were used to help contain dispensing fees and costs for administering rebates for some medications and some free goods, such as free injections, she says. In the back office, there was also a service that would help patients with navigation between the health-care system and the insurer, such as with reimbursement or providing a case worker or a nurse to assist the patient with their actual therapy. Depending on the agreement, it could include a reduction of markup or dispensing fee to help manage those costs transferred to employer plans.

These agreements operationalize some services in the preferred pharmacy network contract, so plan members get more personalized care, says Than. However, that’s not to say customers won’t get similar care and assistance with other pharmacies without a contractual agreement between the insurer and a pharmacy provider, she notes.

Read: The benefits of digital pharmacy for plan sponsors, members