A recent survey by Innovative Medicines Canada found there are growing listing delays among Canada’s private drug plans, said Joe Farago, the organization’s executive director of private payers and investment, during a session at Benefits Canada’s 2023 Face to Face Drug Plan Management Forum in December.
The survey noted private payer review times can take as long as seven to 12 months for complex drugs and more than 13 months for medications for rare diseases. He noted these delays are attributable to the fact that private payers are increasingly adopting public plan tools to evaluate their drug submissions.
According to Innovative Medicines Canada’s data, the cost of private drug claims has increased by roughly 5.9 per cent annually since 2015. In 2022, these costs increased by 7.6 per cent, driven primarily by a 5.4 per cent growth in utilization due to a rise in number of claimants.
Unsurprisingly, small plan sponsors, who typically rely on fully-insured coverage, are particularly susceptible to cost volatility, said Farago, noting while large plan sponsors have a greater likelihood of a high-cost claim, small plan sponsors that experienced a $50,000 claim reported a 20-times greater overall cost per claim.
If the insurance industry could spread private drug plan costs equitably, it would lead to more affordable, comprehensive coverage for plan sponsors. “The current experience rating and pooling methodology used in the Canadian market outside of Quebec poses a threat to long-term sustainability [of private drug plans] specifically for fully-insured small plans.”
In Quebec, pooling is mandatory for plans that cover fewer than 6,000 members, leading to decreased risk for smaller plans. Farago said the model is better for plan sponsors because there’s less volatility due to pooling thresholds that vary by group size.
By switching from a 30-day to 90-day supply for low-cost oral solid drugs, plan sponsors could experience a cost-per-day savings of 45 per cent in Quebec and 60 per cent in the rest of Canada. “Although many may think that their plans already manage [drug] supplies like this, 50 per cent of these claims are still 30 days or less.”
There are also a wide range of pharmacy markups for private drug claims, said Farago, noting a $200 markup cap could generate $145 million in savings, while a $50 cap could generate almost $400 million in savings.
Read more coverage of the 2023 Face to Face Drug Plan Management Forum.