This article is part of our coverage of the Benefits Canada 2011 Face-to-Face: Drug Plan Management Forum, held at the Fairmont Royal York Hotel in Toronto on Dec. 1, 2011. Read more coverage of the event here.
Speaking at the Face-to-Face Drug Plan Management Forum, Steve Moffatt, senior vice-president of sales and marketing with Green Shield Canada, questioned plan sponsors’ ongoing tendency to have their drug plans provide full coverage in today’s financially constrained landscape. “On the one hand, it seems financially irresponsible,” he said. “On the other hand, employers maintain that it’s tax-effective compensation for employees, and plan members cling fiercely to their drug plans.” So where is the “burning platform” for change?
Mercer’s survey of Canadian drug plans
The reality of chronic disease treatment
Biologics and the law
Drug plan lessons from the U.S.As it turns out, the manufacturing sector has been leading the way. “The economic downturn of 2008 hit the sector particularly hard,” Moffatt noted. By making modest changes in plan design, the sector was able to reduce its drug spend in the years since 2008—unlike other sectors, which saw a decline only in the rate of growth.
Specific changes included adjustments of co-pays, dispensing fee caps, generic substitutions and judiciously managed formularies for biologics. “Out-of-pocket expenses for plan members became much higher after the design changes,” Moffatt said. Recognizing that “it’s easier to implement plan design changes for younger people coming in,” the sector focused on developing wellness programs to keep chronic diseases in check.
By communicating the economic rationale for dispensing fee caps to both members and pharmacies, one Green Shield client got buy-in and co-operation, said Moffatt.
Forewarned about the impending $9 cap, “many pharmacists dealing with the company decided to limit their dispensing fee to this amount,” he said.
Moffatt advised targeting a 54% generic penetration rate, using such strategies as generic or therapeutic substitution and maximum allowable costs. Biologic drugs— defined as drugs manufactured by an organism such as a bacterium or yeast—are best managed through an approval process to “ensure they reach only the right candidates,” he said. As for vaccines, “make a decision as to whether you’re in or out, because a lot of new vaccine drugs are coming down the pipeline.”
According to Moffatt, “bread-and-butter” conditions such as hypertension, diabetes, depression and gastrointestinal disorders account for 80% of total drug costs. “If people are trying a new drug, make it available on a trial basis, then increase your prescription period so you’re not dealing with as many refills,” Moffatt advised. Effectively managing these issues while staying the fiscal course also requires a hard look at plan philosophy, he said. “Figure out where your obligations lie and what you want the plan to achieve for your members.”
Gabrielle Bauer is a freelance writer in Toronto. gbauer@sympatico.ca
Get a PDF of this article.