Brand discount cards increase costs to private insurers by 46%: study

If the Canadian government wants to tackle drug coverage, it should focus on the areas where Canadians are facing genuine gaps, according to Joe Farago, executive director of health-care innovation at Innovative Medicines Canada. 

“The reality is only 1.8 per cent of Canadians have no form of private or public drug coverage,” said Farago, speaking at Benefits Canada‘s 2019 Calgary Benefits Summit at the Fairmont Palliser Hotel on May 22. He noted that 1.8 per cent consists of about 47,000 Newfoundlanders and 613,000 Ontarians.

Often lumped into this group, he noted, are the 10 per cent of Canadians who are eligible for public coverage but, for a number of reasons, choose not to enroll. ”Now there is a portion that are underinsured,” said Farago. 

Read: Big pharma may cut R&D, delay new drugs if pharmacare means more generics: memo

Further, he referred to research that found while most plan members in a co-payment system consider their co-pay affordable or affordable enough, 10 per cent have difficulty with it. “No doubt, if you have a higher co-pay and a high-cost drug [and your co-pay] is not capped, you could have a challenge.”

Farago said one of the problems with a major overhaul of how drugs are paid for in Canada is there’s significant evidence that countries that pay less for drugs see fewer launches on new treatments. “The impact of the proposed regulations will drive the initial list prices to levels so low — about 30 to 90 per cent below most international price lists — that [companies may not] bring new drugs to Canada. And their concern is many new therapies will not be available in Canada.”

Higher U.S. drug prices, he noted, correlate with that country seeing 85 per cent of all new drug launches. On the other hand, South Korea, which has been cited as a good comparator to Canada, has lower drug prices and sees about 30 per cent of all new drug launches. New Zealand, on the lowest end of the drug pricing scale, sees 13 per cent of all new drug launches. ”So there is some evidence that there’s a balance [needed] between what you pay for drugs and which ones come to the market,” said Farago.

Read: Health Canada moving to simplify generic drug approval process

He also highlighted the potential instability that federal pricing reforms could bring to the drug sector, which contributes $20 billion to the Canadian economy. Health Canada figures estimated the impact of the proposed reforms on the pharmaceutical sector would be between $6.4 billion and $25 billion over 10 years. One case study, noted Farago, found they could reduce new medicines brought to market by about 70 per cent in the future.

Where plan sponsors are concerned, making private insurance more like the public system decreases the value of the benefits they’re providing, he said. ”Private plans usually have some form of review process and then it usually gets covered within a few months.

“Lately, there’s been a lot of talk about some of the private plans introducing their own type of health technology assessment and some insurers say that could take up to nine months. . . . And I would argue, if the private plans start to mirror and look exactly like the public plans, down the road, the value of the private plans is that they have broader coverage and typically faster coverage. If that’s gone, employers may start questioning why are we paying for these benefits if it’s not providing any value.”

Read more stories from the 2019 Calgary Benefits Summit.