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.
Magna International Inc., a global vehicle part manufacturer and assembler with a workforce of 104,000, has a decentralized management structure that allows every division to run as a separate entity, said Arthur Fabbro, the organization’s director of total compensation.
Typically, drug plans in the organization’s U.S. divisions have a three-tier design comprising generic drugs, preferred brands and non-preferred brands.
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Biologics and the law“Most biologic drugs would fall in the latter category, meaning that plan members would have to go through an established process to get approval for these drugs,” said Fabbro, speaking at the Face-to-Face Drug Plan Management Forum.
In Canada, a two-tiered system—formulary and non-formulary drugs—prevails. Mail-order pharmacy, in its infancy in Canada, “plays a huge role in containing costs in U.S. plans.”
According to Fabbro, Canadian drug plan providers might also learn from these common U.S. practices:
- adjudicating pharmacy claims;
- conducting safety checks and drug utilization reviews;
- negotiating preferred price and rebate arrangements with drug manufacturers;
- negotiating preferred pricing with retail pharmacies; and
- conducting regular reviews to discuss trends, explore and implement plan design strategies, and develop clinical programs.
Future plan design modifications may include out-of-pocket caps, electronic claims submission and automatic generic substitution. “If we could raise generic substitution by just 5%, we could cut major costs,” said Fabbro, who also gave the thumbs-up to clinical and utilization management programs. “These programs hone in on where the costs are hitting our plans,” he said, “and there’s no question they lead to more cost-effective outcomes.”
Gabrielle Bauer is a freelance writer in Toronto. gbauer@sympatico.ca
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