Sounding Board: What plan sponsors should know about pharmacare

Public drug programs don’t consider workplace impact of drugs

A national pharmacare program could lead to certain drugs that improve workforce productivity not being covered. The Canada Drug Agency (formerly known as the Canadian Agency for Drugs and Technologies in Health) is tasked with making coverage recommendations for public drug plans. Their evaluations focus on the drug’s value to the public health-care system and don’t consider the employer’s perspective, such as whether a drug improves productivity or impacts absenteeism or disability. Additionally, public drug coverage mainly targets seniors and low-income individuals, considering different demographics than employer-sponsored plans. Consequently, a new drug that could reduce disability claims or help an employee return to work might not be available.

Read: National pharmacare program will cost $40BN annually with shift of $14BN in private insurance

Public drug plans cover fewer medications and take longer to reimburse

Private drug plans cover a significantly broader range of medications — roughly 40 per cent to 50 per cent more — and provide access to newly approved drugs approximately 500 days faster than public plans. A reduction in the number of drugs covered would substantially impact the standard and quality of care for Canadians with employer-sponsored coverage and lead to increased downstream public health-care costs.

The proposed federal pharmacare program for diabetes and contraceptives covers far fewer medications than are currently available to Canadians with private coverage. It also doesn’t include many diabetes drugs and devices that workplace benefits plans currently cover.

According to Diabetes Canada, most of the commonly prescribed diabetes medications won’t be covered and the proposed program includes only a small number of older diabetes drugs and isn’t aligned with Diabetes Canada’s clinical practice guidelines.

Indeed, estimates indicate that more than two million Canadians are currently covered for medications and devices that wouldn’t be covered under the proposed federal program. Although private plans may be able to offer coverage for drugs not covered by the federal plan, it remains uncertain whether employers would offer such coverage if there were a perception of comprehensive universal public coverage.

Uncertainty about universal, single-payer, first-dollar coverage

The objective of pharmacare, as articulated in the proposed legislation, is to offer universal, single-payer, first-dollar coverage, starting with diabetes and contraceptive therapies. However, the Canada Health Act stipulates that, where there is a single-payer public reimbursement system, private insurance plans aren’t permitted to pay for publicly covered services. This means that employer-sponsored insurance plans wouldn’t be able to offer coverage for drugs covered by single-payer pharmacare but may be able to offer coverage for treatments not covered by the public formulary.

Read: Coverage for high-cost, specialty drugs missing from rollout of feds’ pharmacare plan: experts

As a result, the feds’ newly released pharmacare bill, Bill C-64, as written, could prevent workplace benefits plans from covering drugs included on the formulary’s list. The Minister of Health Mark Holland stated emphatically on several occasions that individuals with existing private drug plans will be able to choose and continue to use their private coverage:

 “For somebody who has existing coverage, you can continue to use that coverage. For somebody who doesn’t have coverage, or is under-insured, this would give them a path toward coverage.”

“[Pharmacare is] going to open up a choice about whether or not you want to use your existing insurance or whether or not you want to go with the single-payer universal system.”

However, these statements conflict with wording in Bill C-64, which is ambiguous about workplace benefits plans. Further clarity and reasons for the federal Minister’s perspective will need to be forthcoming, as this matter is such a fundamental question and important distinction.

Plan sponsors need to assess potential impact of pharmacare

Plan sponsors need drug plans that keep their employees healthy and productive at work. They should consider how a national universal single-payer drug program could negatively impact their plan members and workplace. Although the opportunity to shift costs may appear attractive now, it might have long-term, unintended consequences.

Advocating for plan sponsors

Seven of Canada’s largest benefits advisory firms and benefits associations — Arthur J. Gallagher & Co., GroupHEALTH, Hub International, Navacord, People Corporation, Benefits Alliance and the Conference for Advanced Life Underwriting — have formed the Smart Health Benefits Coalition,the only national advocacy body for plan sponsors and plan members on the potential impact of pharmacare. Collectively, these organizations support health benefits plans for 65,000 small and mid-size employers, including more than 4,800 union benefits plans, which provide coverage for more than 10 million Canadians and their families.

Recently, House of Commons Standing Committee on Health, called HESA, invited the Smart Health Benefits Coalition to present as a witness during its review of Bill C-64 to ensure the voice of plan sponsors and plan members were represented.

Carolyne Eagan is president of the Benefits Alliance and Suzanne Lepage is a private health plan strategist. 

Read: Stakeholders forming coalition to minimize impact of pharmacare on employer-sponsored benefits plans