Although a national pharmacare strategy seems elusive, the Ontario government is making a fairly aggressive investment in that area by spending $465 million to boost its provincial drug coverage by covering residents under age 25 and from 65 onwards.
The program, known as OHIP+, begins Jan. 1, 2018. Children and youth under age 25 will by automatically eligible for the plan.
OHIP+ is a simple expansion of the Ontario drug benefit formulary. It covers 4,400 commonly prescribed drugs, such as antibiotics, asthma inhalers, epinephrine, insulin and oral diabetic medicine, birth control drugs, cancer treatments and drugs to treat attention deficit disorder. Provincial formularies are slow to adopt leading edge specialty pharmaceutical treatments because of the rigid review process for including them.
Most employer-sponsored programs base their coverage around drugs legally requiring a written prescription. Those plans would cover about 9,000 drugs, including some slow-release, high-dosage formulations and certain high-cost specialty pharmaceuticals that provincial formularies wouldn’t include.
Many people refer to the Ontario Drug Benefit program and formulary as a benefit for seniors but, because of the wide swaths of individuals covered by it, the label is somewhat misleading. The ODB provides coverage for Ontario residents with valid Ontario health cards who:
- Receive social assistance benefits;
- Live in homes offering special care and long-term care homes;
- Receive professional services through the home and community care services program; or
- Are under age 65 and encounter high-drug costs in relation to income.
Drugs not covered by the Ontario Drug Benefit formulary may be eligible for funding through the exceptional access program. It facilitates patient access to drugs not included on the Ontario Drug Benefit formulary or where no listed alternative is available. In order to receive coverage, the patient must be eligible to receive benefits under the Ontario Drug Benefit program.
In the case of a child or youth who had previously had coverage for a specialty drug under a private plan, it will be very important for that person to apply for coverage under the exceptional access program as patients must qualify for the particular therapy based on certain criteria. Physicians have received notification to begin submitting exceptional access program requests for their patients prior to the Jan. 1, 2018 start date. Without proper co-ordination, children and youth might find the pharmacy benefit manager will restrict access to certain drugs after Jan. 1, leaving the member scrambling for alternatives (the exceptional access program application process can take up to six weeks for specialty biologic drugs, depending on the priority).
To facilitate the conversion, insurers and pharmacy benefit managers will no doubt provide a grace period of some duration to allow suﬃcient time for the exceptional access program process. That will delay savings to private payers but it will ensure there are no gaps in care for children and youth who are already on a drug currently covered by a private plan but that’s eligible for the exceptional access program.
Will plan sponsors save money?
Plan sponsors looking for relief from steadily increasing drug premiums that have risen much faster than the roughly two per cent annual inflation rate may see some relief. How much relief they’l see, however, is uncertain. Innovative Medicines Canada had forecasted a 5.8 per cent annual growth rate in drug costs between 2016 and 2018, but the predictions are that OHIP+ might yield savings of between three per cent and 10 per cent in 2018, depending on the demographics of the insured members and the speed of conversion from private plans to the provincial program. In the end, the savings may at least neutralize forecasted growth assumptions.
Cynics may question whether insurers will, in fact, lower health-care rates. Regrettably, we fear private payers with traditional fully insured benefits plans may never see the full impact of the savings from OHIP+ due to the various utilization and pooling adjustments levied by insurers. Plan sponsors that have administrative services-only plans will, however, see the full savings through lower costs for drug claims.
Having said that, at least one of the big insurers in Canada is starting to pass on individual reductions in health rates on January 2018 billing statements. The first such notification showed a reduction of 11.8 per cent.
What should happen after January 2018
As of Jan. 1, children and youth will have to show their provincial health cards at the pharmacy. The expectations is that pharmacy benefit managers will update their processing systems to automatically reject prescriptions that should go to the OHIP+ program.
Under the terms of the program, pharmacies can’t charge any price differentials to private plans. Thus, users should have no copayments or deductible costs. In addition, it’s important to note that pharmacies will receive the same dispensing fee as with the Ontario Drug Benefit program.
The Trillium drug program remains an option for Ontario plan members for drug expenses not covered by OHIP+ or the exceptional access program. Whether a private plan partially covers a drug or not at all, the Trillium program, upon application and approval, will provide coverage for approved drugs once a person reaches a quarterly deductible equivalent to up to about four per cent of net family earnings.
Where things get blurry is with respect to household members where a child or youth is already in the Trillium program. Those individuals will no longer contribute to the household deductible. Their claims through the OHIP+ program won’t contribute towards meeting the household’s quarterly deductible.
Private payers will still face some costs
In certain situations, such as where eligible youth are studying outside of Ontario, private payers will see no savings. More commonly, since the Ontario Drug Benefit formulary includes less than half of the 9,000 drugs covered by most plans, private payers will be responsible for the full cost of medications not eligible for OHIP+.
And for those plan sponsors that have resisted the trend towards mandatory generic substitution, what will happen as of Jan. 1, 2018, is that if a doctor writes “no substitution” on the prescription, the private payer plan will pay for the cost of the brand-name drug as it’s unlikely OHIP+ will cover it.
Similarly, if the plan honours branded drug pricing, the patient can insist on the brand-name medication. With many generics priced at 25 per cent or less of the cost of the brand-name drug, plan sponsors will be unhappy to find out that insured child and youth plan members aren’t taking advantage of universal benefits provided by the government. If coupon cards didn’t invoke a shift to mandatory generics, perhaps OHIP+, when fully understood, may be that catalyst.
What should plan sponsors do?
- Communicate, communicate, communicate: Post every and anything from their insurer or pharmacy benefit managers in regards to OHIP+ and their insured members.
- Encourage staff who may have dependants on a high-cost specialty drug to enrol in the exceptional access program in advance of Jan. 1, 2018.
- Consider amending the drug plan to implement mandatory generics substitution.
Chris Pryce is managing director of Human Capital Benefits in Toronto.