Mercer’s survey of Canadian drug plans

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.

Barbara Martinez, a principal with Mercer, reported at the 2011 Face-to-Face Drug Plan Management Forum on the findings of the organization’s 2011 survey of Canadian private drug plans. The 420 employers that responded to the survey had workforces ranging from under 100 to more than 20,000 employees, with a median of 600.

Not only do more than 70% of respondents pay at least 80% of drug costs but “a large proportion also cover over-the-counter drugs, which came as a surprise,” said Martinez. What’s more, only 14% of surveyed plans have an annual or lifetime maximum. “We think these features will become more prevalent, particularly for small employers,” she said. The same goes for out-of-pocket caps. “Right now, only 28% of companies have them, but the feature is growing in interest.” In the meantime, 39% of employers have no pooling protection, “which is very risky unless you have other means of protection, such as lifetime maximums.”

Key findings of the survey also include the following:

  • 86% of respondents have drug cards, almost always the pay-direct type;
  • 37% have dispensing fee caps, with an average cap of $7.92;
  • 51% of plans require drug substitution when applicable, but only 18% will not pay for the brand name drug if the doctor insists on prescribing it;
  • 52% of plans share costs with employees;
  • only 10% of plans communicate with employees on a regular basis; and
  • 55% of respondents intend to change their plan design.

What if drug costs were to increase from 1% to 5% of payroll? “When presented with this scenario, more than 80% of respondents said they would change their plan design,” said Martinez. Given that 62% of employees expect their employers to provide retirement coverage, “change is something every employer needs to face.”

Gabrielle Bauer is a freelance writer in Toronto. gbauer@sympatico.ca

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