As more insurers turn to preferred pharmacy networks to decrease costs, their efforts are being met with some resistance by plan members who may be finding it difficult and inconvenient to switch pharmacy providers.
In January, Manulife Financial Corp.’s move to a preferred pharmacy network with Loblaw Cos. Ltd.’s Shoppers Drug Mart was met with public backlash, resulting in the insurer reversing its decision February 5.
Telus Health, one of the latest providers to switch to an exclusive PPN, announced in March that it will only reimburse employees for certain drug prescriptions if they’re filled through the company’s own virtual pharmacy, according to reporting by the Canadian Broadcasting Corp.
The CBC spoke to three employees of Telus Health who expressed frustration that they would no longer be able to choose where they filled certain prescriptions unless they paid out of pocket. They also had concerns that they could miss deliveries of vital medications by using the virtual pharmacy and that those who live in rural areas could be especially affected.
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In a statement to the CBC, Telus Health said the policy “is in line with the standard approach” of other pharmacy companies and the move “offers a range of advantages, including enhanced co-insurance and reduced dispensing fees. . . . In addition, we place great importance on involving our employees in testing and using our services, as their valuable feedback allows us to continuously enhance our offerings for our clients.”
Suzanne Lepage, a private health plan strategist, said she isn’t surprised with Telus Health’s move, noting the organization launched its own pharmacy in 2022 as a tool for plan sponsors to save on drug costs.
“Most private payers (insurers and pharmacy benefit managers) have a preferred pharmacy or pharmacy network to offer plan sponsors,” she said in an emailed statement to Benefits Canada, noting they offer plan sponsors an opportunity to save on drug costs. “The cost of the drug claim at the pharmacy includes the drug list price, wholesaler and pharmacy markup and pharmacist dispensing fee. Preferred pharmacies usually agree to a lower markup and/or dispensing fee, in addition to additional patient services.”
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She also noted these agreements can be implemented in different ways to generate savings. “When they are optional, if plan members use them, there are potential savings; however, benefits plans that offer an incentive, [such as] lower co-insurance for members who use the PPN, or make them mandatory will generate more savings because the pharmacies are likely to offer a bigger discount in return for greater certainty of the increased number of prescriptions they will generate.”
Indeed, a 2023 report by Innovative Medicines Canada found cost per claim outside Quebec is $75.91, with 76.3 per cent of that fee comprising the list price, while 13.9 per cent is attributed to dispensing fees and 9.8 per cent to mark-up. The report estimated that a one per cent reduction in markup would result in a 0.1 per cent decrease in drug spend, while a five per cent decrease in markup could generate 0.49 per cent in drug plan savings.
If the drug markup was capped, it would generate 2.3 per cent in savings when markup was limited to a maximum of $50 and 0.9 per cent when mark-up is limited to a maximum of $200.
“Private plans are looking for ways to manage their drug plan costs and the cost of drugs continues to grow,” said Lepage. “If plan sponsors can encourage their plan members to use lower-cost pharmacies the plan can remain sustainable and continue to a high level of coverage, while minimizing costs, instead of limiting or restricting coverage. . . . Offering a lower-cost pharmacy solution to their plan members helps them navigate the cost of their drug claims.”
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