Although David showed early symptoms in his late teens, he was only diagnosed with rheumatoid arthritis (RA) once he was well established in his career. His symptoms progressed to the point where it became difficult for him to manage the day-to-day requirements of his role. Although he suffered, his commitment to show up at work every day prevented him from going on disability.
Fortunately for David, in the late ’90s—after many inadequate treatments—his rheumatologist found a combination of medications that worked, including the biologic drug Enbrel. These treatments not only provided him with relief but practically put his condition into remission. The year following these treatments, David says, was his most productive and profitable, and he was promoted to a senior operations position. For 10 years, David West has managed and grown the Toronto operations of Mercer Human Resource Consulting, thanks to a biologic drug.
West brings a unique perspective to the challenges and benefits of managing biologic drugs in group plans. He understands the challenges of plan sponsors in managing their drug plans and the impact that long-term disability (LTD) costs can have on the bottom line. To Mercer, West’s annual treatment cost of $21,500 was not only an investment in his health and productivity but also a way to avoid significant LTD costs. West provided strong leadership and growth to the organization once he was able to manage his symptoms.
Impact on Private Drug Plans
Biologic drug price tags may be higher than those of traditional drugs, but they treat a much smaller patient pool. According to ESI Canada’s 2008 Drug Trend Report, specialty or biologic medications represent 14.7% of drug spend but less than 1% of all claims. What most concerns private drug plan managers is the annual growth rate of specialty drug spend: 17% compared with 3% for all other drugs. Biologics offer tremendous clinical value, but they also represent more than 50% of the drugs in the pipeline.
ESI Canada examined claimants with more than $5,000 in annual claims and, as expected, many were using specialty or biologic drugs. What you might not expect, however, is that many of the high-cost claimants were taking these medications for chronic conditions such as diabetes, high blood pressure and high cholesterol. Many of the conditions treated by biologic drugs are not preventable—for example, RA, Crohn’s disease, cancer and multiple sclerosis. However, diabetes, high blood pressure and high cholesterol are near the top of the high-cost claimant list, affect a large patient population and could be addressed or prevented through modifiable risk factors and healthy lifestyle choices.
Because of the significant differences in size and molecular makeup of biologic drugs, they are not very stable in the gastrointestinal system and are best suited to intravenous (IV) administration. In Canada, IV drugs are often delivered in a hospital. This raises a whole new complexity for private plans whose group contracts exclude drugs administered in a hospital.
Many insurers consider these “insured hospital services” under the Canada Health Act and believe that the hospital should fund them, meaning the private plan will decline the claim if the drug is infused in a hospital. Even more confusing, some private plans pay for treatment if the drug is delivered in one of a growing number of private infusion clinics in Canada. Yet there are concerns about moving a patient outside of the hospital setting and traditional care stream for treatment, such as coordinating patient charts, medical records and lab work.
Because of the complexities of private drug plans, patients are often bewildered as they try to understand their coverage for biologics. As a result, a variety of different patient assistance program options have evolved to help patients determine what coverage is available to them. These programs may be funded by hospitals, drug companies, not-for-profit groups or public health plans, but they all serve the same purpose: to provide skilled staff to assist a patient in navigating his or her available coverage. These programs advocate on behalf of the patient for public, private, compassionate and even international medication access. They are highly valued by, and bring comfort to, patients who are distracted by their disease and its effects on their health.
The Plan Sponsor’s Response
In Mercer’s case, its clients tend to be larger plan sponsors that are more concerned about total compensation costs than the specific cost drivers of their drug plans. Rather than tinkering with drug coverage, many plan sponsors are moving to employee-paid disability benefits to manage costs and allow members to take advantage of non-taxable benefits. Plan sponsors are also ensuring that they have pooling protection for their drug plans to protect against the impact of catastrophic drug claims. West feels that there are opportunities to better understand the correlation between drug costs and disability costs, and that the insurance industry has a wealth of data that could be studied. He also recommends that we continue to explore private and public partnerships for pooling and patient protection from large out-of-pocket costs.
Rob Crofts, vice-president, group benefit solutions, with Corporate Benefit Analysts, deals primarily with mid-size clients that feel that the drug benefit is one of their most important employee benefits. They believe that biologic drugs are breakthroughs in treating serious medical conditions; however, they are also very concerned about the potential impact on costs.
Many clients find drug plan management complicated and difficult to communicate to employees. They rely on their advisor, insurer and pharmacy benefit manager (PBM) to ensure that the plan is effectively managed—for example, using prior authorization to ensure that members meet the clinical guidelines for biologic drugs. Clients also rely heavily on pooling arrangements to protect their plan experience and rates from the impact of large biologic drug claims. What they are finding, though, is that in order to keep pooling charges affordable, insurers are more frequently increasing the claims threshold levels, which can erode the level of protection over time.
Vic Medland is president of group insurance services at the Ontario Teachers Insurance Plan (OTIP), which manages benefits for more than 112,000 members within the Ontario education sector. Biologic drugs to treat RA are the top drugs in the plan, and OTIP views prior authorization as an effective tool to ensure that the right member gets the right drug at the right time.
Medland believes that covering biologic treatments for catastrophic conditions is an important component of what insurance plans are designed for, but the issue of paying only for infused drugs in a private clinic is an area of frustration. In one situation, this meant that a plan member who was in severe pain had to drive to a private clinic 45 minutes away, versus receiving an infusion in the community hospital. Out of compassion for the member, OTIP decided to pay for the infusion in the hospital, since it would have paid if the plan member had travelled to the private clinic. However, OTIP would really like to see this issue resolved rather than having plan members being caught in the middle.