Webinar: Current health-care policies impacting private drug coverage

On May 12, Benefits Canada hosted a webinar to discuss the pharmaceutical industry’s efforts during the coronavirus crisis, as well as some key policy issues for Canadian insurers and their potential impact from the private-payer perspective.

Since the end of April, 139 coronavirus treatments have been under investigation and Health Canada has approved several clinical trials to see if these are effective, said Pamela Fralick, president of Innovative Medicines Canada. When it comes to the intersection between the pharmaceutical industry, the innovative world and the pandemic, testing, treatment and vaccines are the order of the day, she noted. “Collaboration and partnership will allow us to arrive at the best decisions, whether it’s around a response to the pandemic or response to the [Patented Medicine Prices Review Board] regulatory reforms.”

Read: PMPRB to publish new draft guidelines, open up final consultation

While the PMPRB passed reforms into law in August 2019, they haven’t been implemented. Analyses conducted on the impact of these regulatory changes show a large discrepancy that needs to be addressed, noted Fralick.

Health Canada has estimated that the impact on the industry will be $8.8 billion in net present value over 10 years, compared to consultancy PDCI Market Access’s projection of $41.8 billion, she added, which translates into between a 70 and 80 per cent reduction on ceiling prices.

That being said, what’s more important than the impact on individual companies is the effects on patients, said Fralick, because the environment in Canada has been, and continues to be, uncertain for the industry, meaning global decisions are being made around bringing drugs to the Canadian market.

Drug launches are a good indicator of whether companies are bringing drugs to Canada, said Joe Farago, executive director of private payers and investment at Innovative Medicines Canada. In 2019, only 17 drugs were launched in Canada, which is the lowest number in many years, he added. The proposed PMPRB reforms could have significant impacts on drug access across private and public plans alike, he said, highlighting the important balance between prices and having access to future innovation, cures and treatments.

Read: What will PMPRB drug pricing changes mean for plan sponsors?

In 2017, total health-care spending in Canada was about $235 billion, said Farago, but the share of this budget related to all prescription drugs has hovered around, or just below, 15 per cent for the past decade. In 2019, drug spending grew at 1.8 per cent, he added, which was less than hospitals at two per cent. “Drugs aren’t taking a larger share over the total health-care budget, nor are they growing faster than other health-care spends [in Canada].”

In terms of the impact of the PMPRB reforms, Canada is already experiencing longer wait times for new medications, he said, noting these may not be launched at all. If a country can’t access a drug, it’s unethical to commence clinical trials, he added. “Reduced access to innovation is a risk and, therefore, reduces productivity and revenue for companies paying for these health benefits.”

Farago also referred to the 2019 private drug cost drivers report, which found the growth rate in Canada’s private market was 3.5 per cent between 2016 to 2018. And utilization, excluding Ontario, accounted for 88 per cent of this growth. Chronic diseases represented 86 per cent of the growth nationally and remains one of the key cost drivers, he added, but drugs that cost between $10,000 and $25,000 accounted for 50 per cent of the growth due to increased utilization.

Read: Sounding Board: 2019 benefits costs show the sky isn’t falling

Further, the top four classes of drugs used were biologics for autoimmune diseases, diabetes, cancer and other autoimmune drugs, noted Farago, and the age group driving most of these costs was employees between the ages of 45 and 64, accounting for 50 per cent of the Canadian private market’s growth.

It’s important to look at all the potential cost drivers in a benefits plan, said Farago. “Employer costs go beyond health benefits and include short- and long-term disability, especially given the overall growth rates for drugs seen in recent years, which have been in the low-single digit.”

Find out what you missed by accessing the full webinar here.