One way employers can stay on top of their drug spending is to understand how Canada’s medication prices are formed and to educate their employees about the value of the drug plans they offer.
That was one of the messages during a recent Toronto meeting of the Canadian Leadership Council on Drug Plan Partnerships.
Employers need to know Canada has no free pricing the way the U.S. does, for example. “The majority of products in Canada are priced based on existing prices in Canada, not on somebody making up a horrendous price,” said Claudia Neuber, director of pricing and contracting for North America at AstraZeneca in a post-event interview. “If there’s something on the Canadian market that does the same thing, I am bound under the regulations to price it the same way.”
Also, the Patented Medicine Prices Review Board monitors Canadian drug prices not only at launch, but also throughout the entire life of the brand, Neuber added. This includes ensuring medications on the Canadian market are not the most expensive ones in the world.
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Additionally, employers need to understand how the price increases through the supply chain so they can know if the markup is reasonable.
Pharmaceutical companies can only control what they charge the wholesaler; they have no control over what the wholesaler charges the pharmacy and what the pharmacy submits to an insurance company, Neuber explained.
“So it may not be that the manufacturer’s price is the cause of the challenge—because that’s regulated,” she explained. “Is, [say], a 40% markup reasonable for a pharmaceutical product? Maybe; maybe not. That’s where I think, possibly through their insurance plans, [employers] may have the ability to manage that better. “
This regulatory process applies to biologic drugs as well.
Read: Age-based drug plans outdated: Report
Apart from understanding pricing, employers need to properly communicate the value of their drug plan to employees. “Member education is about helping members understand they’re part of managing the cost,” said Chris Pillitteri, assistant vice-president of group underwriting and client reporting with Manulife Group Benefits and Retirement Solutions.
And to make the whole system more sustainable, employers, pharmaceutical companies, insurers and other players need “a different dialogue […] without finger pointing” said Neuber.
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