Two-thirds (66 per cent) of employer respondents have increased their benefits spend over the past three years, according to the 2016 Sanofi Canada Healthcare Survey.

The main reasons for spiking benefits costs, according to the survey, are more expensive drugs (54 per cent) and more plan members making drug claims (40 per cent), including for biologics and other expensive medications (18 per cent).

Nevertheless, employers report that traditional drugs are bigger cost drivers than pricey specialty medications, partially due to poor self-management of chronic disease. “For example, after one year about half of people treated for high blood pressure or high cholesterol stop taking their medications,” said one of the report’s advisory board members, Steve Semelman, chief executive officer of Gemini Pharma Consultants.

Read: Retiree benefits shrinking quickly: survey

The report also found many plan sponsors don’t understand how they can cut costs. Just 40 per cent are somewhat knowledgeable about annual deductibles and co-payments, while 39 per cent know about mandatory generic substitution. The levels of understanding drop off when it comes to managed or restricted formularies (17 per cent), case management for high-cost specialty drugs (13 per cent) and stop-loss insurance (10 per cent).

“Levels of understanding are certainly correlated to whether or not this cost control measure is available or in place in a workforce,” said Lisa Callaghan, a survey advisory board member and assistant vice-president of product and group benefits at Manulife, during the survey’s launch event in Toronto on June 14. Half (51 per cent) of plan sponsors that understand stop-loss insurance reported they use it, compared to the nine per cent of overall respondents that do.

“We do suspect that low levels of awareness on drug plan management measures are contributing to concerns around costs,” said Callaghan. “And concerns around costs may stifle other investments focused on health. And so it is important to have awareness and education from a plan sponsor perspective on what’s available to support cost in order to support a broader investment in health.”

More than half (54 per cent) of plan sponsors said they’d invest the same amount in benefits over the next five years, not considering increases for inflation. A third (32 per cent) will invest more and just eight per cent will invest less.

Read: How drug plans are addressing skyrocketing costs

Interestingly, plan sponsors with wellness programs are more likely to say they’ll spend more on benefits, which “clearly reflects that employers see the value of their involvement in wellness and are committed for the long term,” said Loretta Kulchycki, vice-president of group marketing at Great-West Life and one of the survey’s advisory board members.

How do the 2016 results compare to the situation five years ago?

Sanofi’s 2011 report profiled Interuniversity Services, a program in which post-secondary institutions in Atlantic Canada buy benefits in bulk to cut down on costs. “On our own, we’re just 350 employees, but combined we are 17,000 employees with $48 million in premiums,” said Lois Devoe, director of human resources at Cape Breton University. “It means we can pool our risk and share information on utilization, while still having unique plan designs. We probably save $2 million a year collectively, which is reflected in lower premiums.”

Read more findings from the 2016 Sanofi Canada Healthcare Survey

Copyright © 2020 Transcontinental Media G.P. Originally published on

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