Legislative changes over the past year have affected the landscape in which Canadian benefits plan sponsors operate. A presentation to delegates at the CPBI Western Regional Conference on Friday, Oct. 31 sought to examine whether these new regulations present threats or opportunities to plans, and what those in the industry might do to become more engaged with governments during the legislative reform process.
Changes affecting benefits plans
Provincial changes to generic pricing, drug formulary changes, delisting of services and the implementation of HST in various jurisdictions are some of the regulatory changes Marilee Mark, vice-president, marketing, with Manulife Financial, pointed to as forces that have affected employee benefits plans. Many of these legislative updates have either already provided opportunities for plan cost reductions or will likely lead to increased savings in the future, said Mark.
Generic pricing regulations, for one—which are gradually being put in place by provincial governments—should help cut down on drug benefit expenses by ensuring prices of generics are capped at a regulated percentage of their branded equivalents.
Mark also said pharmaceutical regulations are opening up opportunities to wrest some control away from pharmacies.
“We need a disruption in the market in order to not continue the status quo, in particular with how the drug system has run where the pharmacies have had so much control. Disruption can bring risk, but on the flip side, it’s an opportunity,” she said.
But Mark also pointed to a number of potential threats brought by some recent legislative changes.
The Alberta government’s 2009 decision to delist chiropractic services from provincial coverage, for example, resulted in a cost shift that private plan sponsors have had to determine whether they would assume. She also pointed to the risk of increased administrative burdens that plan administrators face when certain legislative changes are introduced—such as those seen following the federal government’s introduction of the Natural Health Products Regulations, which saw a number of products formerly classified as DIN drugs and covered under private plans reclassified as natural health products.
Working together as an industry
Mark told delegates that, typically, industry involvement in the legislative process “has been more reactive, more response when approached.”
The push for regulatory changes usually comes from global crises or market forces creating an issue that needs addressing. From there, a government forms a position and tables proposed changes. It’s only at that point that most stakeholders get involved in the legislative process, either because they’re invited to do so or because they take issue with certain proposed changes.
She stressed the importance of those in the pension and benefits industry finding new ways to interact with governments at all levels, in order to help drive and design regulatory changes that work for the industry and the employees it represents.
One way to do this is to find new ways to speak as a united voice—together as an industry, rather than individually as insurers, consultants or employers.
Mark said that insurers and employers have data on the financial impact of certain changes, and on the needs of plan sponsors, which can be useful in helping to influence which regulatory issues get attention at the government level.
She pointed to generic drug pricing is a prime example of an issue that affects everyone in the pension and benefits industry equally. “It’s not a competitive issue between companies. It’s an issue that’s common to all of us, where we’re all looking for some of the same things. So we need to look for those opportunities for integration,” she said.