While plan sponsors face significant pressures from rising drug costs, it’s important to consider the full range of tools available that will allow them to continue to offer the coverage employees need, participants at Benefits Canada’s Calgary Benefits Summit heard.
“Prescription drugs are the No. 1 benefit that employees value as part of their health benefits plan,” Joe Farago, executive director of health-care innovation at Innovative Medicines Canada, said during a presentation at the April 27 event.
According to research by QuintilesIMS, drug costs in the Canadian private payer market rose 4.1 per cent in 2016. QuintilesIMS also forecasts there won’t be any blockbuster drugs coming onto the market in the next couple of years, which means that “plan sponsors have some time to clean up their plans and practices conducive to maintaining health and preventing disease,” said Farago.
With benefits costs expected to rise in the longer term, “it’s key to look at benefit plan hygiene,” he told the audience in Calgary.
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Farago urged plan sponsors to look at all cost drivers in their benefits plans and take a holistic view when addressing what they’re spending money on. “The drugs are a significant portion, but not the only portion, of the cost of a prescription,” he noted, citing markups and dispensing fees in addition to claims costs of 15 to 20 per cent added by insurers.
“It’s important for all of these things to be considered, because there are new and innovative products coming down the pipeline that a lot of your employees and plan members are going to need access to,” he said.
In response to an audience question about what employers should consider first when addressing their plans, Farago suggested that plan sponsors ask their broker or advisor to share data with them about the specific diseases they’re paying to treat. “Understand what you’re spending your money on, before you start tinkering with your benefits plan.”
In response to another question about employee wellness programs, Farago suggested that the most important thing for plan sponsors to focus on are metrics in areas such as blood pressure and glucose values as well as rates of absenteeism.
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And in response to a question about mental-health issues, Farago said it doesn’t make sense to make cuts in that area. “The [return on investment] for mental-health medications will far outweigh the costs,” he said.