Options for getting the best value from drug plan spending

Employers should review their drug plans annually to make sure they’re getting value for money, according to a speaker at the recent Face to Face Drug Plan Management forum.

“It’s good drug plan management hygiene,” said Kim MacFarlane, assistant vice-president of group benefit product at Manulife Financial Corp.

Even if the unwieldy nature of drug plans makes quick design changes difficult, she told the audience at the Dec. 14 event that plan sponsors can put themselves in a better position by identifying problem areas.

“There’s lots of capacity within the drug plan spend to remove some of the elements that don’t really deliver additional value when it comes to health-care outcomes,” said MacFarlane, who spoke as part of a panel of experts.

Read: Private plans to see drug costs rise by 6.1% annually over next five years

Other panellists agreed that employers view their drug plan spend as unlike any other expense on their books. “If it was just another expense, there would have been cuts like we’ve seen in many other spaces in corporations for years,” said Mark Rolnick, vice-president of payor partnerships and plan sponsor innovation at Shoppers Drug Mart. Still, “there is more scrutiny on that investment” than ever before as costs continue to rise, he added.

MacFarlane said the focus on value has changed the approach taken by plan sponsors to high-cost treatments. Gone are the days when drugs went straight onto formularies after gaining Health Canada approval, she said. “Ideally, we’d like to be in a position to offer all therapies, but it is becoming increasingly challenging,” she said. “Not all therapies are equal. Some are highly effective; others are less effective. But just looking at the cost doesn’t tell you whether or not it’s going to be.”

She said most plans can also free up money for cutting-edge drugs by employing active management techniques such as generic substitution, prior authorization and step therapy. Rolnick, too, noted the savings opportunities from focusing on spending on traditional drugs. “More effectively managing traditional drug spend where there are many treatment options available, sponsors can create room in their drug plans to afford treatments in the specialty category which treat unmet medical needs,” he said. 

Read: Deeper dive into cost projections nets big savings for benefits plan

John Herbert, director of strategy, product development and clinical services at Express Scripts Canada, said he believes most employers see their drug plans as something that can lead to enhanced productivity, reduced absenteeism and fewer disability claims. However, demonstrating the connection between better drug plans and improved outcomes can be a challenge “because of the lack of access to integrated data in Canada,” he said.

His company’s U.S. parent has performed studies linking drug adherence to positive health outcomes in diabetes patients, including fewer emergency room visits and in-patient hospitalizations.

“We have to sort of make assumptions that better adherence would also lead to similar reductions in absenteeism and disability for plan sponsors here in Canada, given the link between adherence and health outcomes” said Herbert.

Read: The great pharmacare debate: An ‘overly simplistic’ solution or needed system rationalization?

Kevin West, vice-president at HealthForward, says it’s also important for experts to continue trying to put dollar values on the benefits of drug plans so employers can “connect a return on investment to the expense” they pay out.

“There will be a great focus on this type of research in the next year,” he said.

Read more stories from the Face to Face Drug Plan Management Forum