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Recent developments in pharmaceutical benefit coverage

Several new developments in 2019 point towards greater government intervention to manage drug prices as well as the cost of public drug plans. These changes may result in better sustainability for private drug plans and point to the need for private plan sponsors to pro-actively manage their drug plans.

Federal drug pricing regulations

Revised federal drug pricing regulations were published on August 21, 2019, and will become effective on July 1, 2020. These revisions are expected to lower the costs of new patented drugs entering the market by allowing the Patented Medicine Prices Review Board to set prices based on how well the drug works compared to other available therapies and by revising the reference countries used to guide how drugs are priced. The changes are facing a recent constitutional challenge by several pharmaceutical companies.

As the new regulations would only apply to new patented drugs, we do not expect private plans to see a significant reduction in current costs in the foreseeable future. Instead, these changes will contribute to long-term sustainability of private plans as well as government programs by managing new drug costs.

British Columbia biosimilar transition program

British Columbia’s provincial PharmaCare program has announced a biosimilar transition program. This program is the first of its kind for a Canadian public drug plan. This program will transition individuals taking certain high-cost biologic medications to lower-cost biosimilar medications. This program is significant in the Canadian marketplace, where most private insurance carriers and public plans do not currently support biosimilar transitions and the utilization of biosimilars is much lower than in other countries. British Columbia expects to save approximately $96.6 million over the first three years of this initiative.

Several insurers have indicated that they will align their coverage with the provincial plan for BC plan members. Since managing the spiraling cost of biologic drugs is one of the highest priority challenges for many private drug plans, increased usage of biosimilars would improve the financial stability of private drug plans.

Pharmacare report released in June 2019

As discussed in the July 2019 News & Views, the final report of the Advisory Council on the Implementation of National Pharmacare was released in June 2019, calling for a universal single-payer drug plan for all Canadians phased in between 2022 and 2027. If implemented as proposed, there would be a significant impact to the employer-sponsored drug plan landscape. National pharmacare is anticipated to be a significant issue in the October 2019 federal election.

Insurance companies restrict access to opioids

For reasons unrelated to cost control, many insurance companies have been proactively implementing new controls to manage the supply of opioids to private drug plan members. Many companies have implemented harm-reduction programs that only reimburse short-acting opioids and dispense a reduced supply, minimizing misuse of leftover drugs.


Comment

Drug plans are a key component of employee benefits packages and are typically a highsly valued part of the employee experience. The cost increases associated with private prescription drug plans have been outpacing salary increases for years and some employers are struggling to maintain plans with comprehensive coverage while also investing in employee health and productivity. Plans that have been more proactive in managing costs generally find themselves better able to withstand change and invest in employee health and productivity. However, the 2019 Sanofi Canada health-care survey found that only 26% of plan sponsors regularly receive reports to help understand their drug plan and where dollars are being spent.

Progressive organizations are increasingly focusing on prevention of health problems and overall employee wellbeing to meet the needs of the growing younger and diverse workforce. While some private plans have modernized and leveraged their prescription drug coverage to meet these goals, many other plans still include outdated provisions that represent lost opportunities. A Morneau Shepell consultant can assist organizations in optimizing the value of their drug plan and overall programs for employees.


News & Views - September 2019 (PDF)