With big escalations in drug plan costs year after year, many plan sponsors want to get a better grip on spending. But how can drug plans better manage costs without restricting members’ access to the medications they need?
At the Face to Face in Drug Plan Management in Vancouver, Michael Law, Canada research chair in access to medicines and an associate professor at the University of British Columbia’s school of population and public health, presented his research into changes in drug plan design.
Studying data from Applied Management Consultants Ltd. and Statistics Canada, Law’s research team looked at trends in drug plan design and grouped cost-saving measures into two categories: blunt tools involving design features that apply to all drugs equally to lower expenditures or control costs; and more sophisticated changes that steer people to more cost-effective therapies.
On the blunt side, plans with deductibles actually dropped to 10 per cent from 48 per cent between 1998 and 2015. However, other patient charges increased during the same time frame: plans with caps on dispensing fees jumped to 51 per cent from three per cent; co-insurance rose to 89 per cent from from 71 per cent; lifetime maximums rose to nine per cent from less than three per cent; and annual maximums climbed to 13 per cent from three per cent. Not surprisingly, Law noted there is evidence that retiree coverage had fallen significantly by 2014 in comparison to 2006.
More refined changes include mandatory generic substitution and formularies. “Having a formulary on the drug plan is another place that’s starting to see movement in Canada,” said Law. “In 2010, about 19 per cent of plans had a formulary, and that number is going higher. This opens up the possibility for private plans to negotiate product listing agreements with manufacturers.”
As plan sponsors implement changes to their plans, Law hopes they will consider the impact on patients. “I think these changes are probably inevitable, and it’s going to be like the steam engine: slow to move but tough to stop once it starts. The more thoughtful we are about how we design drug plans going forward, the better off our employees and retirees are going to be.”