Concentrated portion of plan members responsible for 53% of total drug costs in 2019: report

Aside from 2018 — the year the Ontario government introduced the OHIP+ program, which provided drug coverage for all Ontarians aged 25 or younger — overall drug costs have risen each year, with the trend ranging from four per cent to more than 14 per cent per year.

Read: How will OHIP+ rollback affect plan sponsors?

The report noted the OHIP+ program resulted in a substantial reduction in costs for private plans with a large component of plan members in the province. However, in 2019, Ontario reversed the program for those who had private coverage, effectively eliminating the previously gained savings. Between 2018 and 2019, the number of claimants younger than age 25 soared by 84 per cent, contributing to a more than seven per cent rise in the total number of claimants and an eight per cent increase in total drug costs over the previous year.

A concentrated portion of claimants are responsible for a disproportionately large share of overall expenditures, typically suffering from multiple chronic conditions and/or diseases. That cost concentration is growing even stronger, according to the report, which found the share of cost for the top five per cent of claimants made up an increasing share of the total drug cost over the years, from roughly 51 per cent in 2015 to almost 53 per cent in 2019.

The average annual cost per claimant for the top five per cent was $8,306 in 2019, which was more than 21 times the amount of the other 95 per cent of claimants ($392). The top five per cent of claimants had an average of 66 claims in 2019, versus just nine claims for the other 95 per cent of claimants. From 2015 to 2019, the number of claimants with annual treatment costs under $100 increased by 10 per cent. However, in comparison, the number of claimants with annual treatment costs over $30,000 increased by a staggering 50 per cent over the same period.

Read: Just 22% of health benefits plan sponsors regularly receive claims data: Sanofi survey

While the report highlighted the recent shift from generic drugs to the management of biologics and other high-cost drugs, it also noted that generics continue to be an important source of savings for drug plans across the country.

However, generic use to 62.5 per cent in 2019, up from 55 per cent in 2015, representing an important improvement in the way private plans are embracing mandatory generic policies, according to the report. As well, while generic claims made up a larger market share, their share of total drug cost declined modestly over time, from nearly 29 per cent in 2016 to roughly 28 per cent in 2019.

Specialty drug spending grew by 14 per cent from 2018 to 2019, double the rate of non-specialty spending (six per cent). While only 0.9 per cent of all claimants used a specialty drug in 2019, the expenditure made up roughly 25 per cent (or $393 million) of the total drug cost, reflecting the cost concentration of spending.

Read: Growing use of specialty drugs putting pressure on plan sponsors: report

“This report comes at a challenging time for Canada in general and our health-care system in particular,” said Charles Rosen, managing director at HBM+, in the report. “As COVID-19 continues to ravage the Canadian economy and strain our health-care resources, we find ourselves looking for solutions more than ever.

“Yet these challenges are compelling us to fundamentally re-think how we structure our health-care services, as well as our benefits plans to support Canadians while maintaining long-term viability. The lens of value will become ever more important in these times as we determine how to balance the dual goals of sustainability and access. The solutions we propose in this report will serve as a roadmap to achieving this goal now and in the future.”