As plan sponsors contend with high utilization of their drug plans and a host of costly new drugs coming to market, a variety of cost-containment measures can ensure plans remain sustainable while still supporting members.
Plan sponsors’ annual drug plan spend has been steadily rising, said Martin Gascon, senior director of group benefits at Eckler Ltd., during a session sponsored by Novo Nordisk at Benefits Canada’s 2024 Healthy Outcomes Conference.
Diabetes is among the top two conditions in Canada when it comes to the number of drug claims and the amount paid, he said, noting Eckler expects it to rise to the No. 1 condition soon. According to Express Scripts Canada data, 50 per cent plan members who were taking one diabetes drug in 2018 are now taking two drugs, with a significant proportion taking three or more. Patients’ annual spend has also risen as more doctors are prescribing effective new treatments that have higher price points, such as semaglutide.
Read: How benefits plan sponsors, insurers are managing newer GLP1 medications
High-cost molecules are also a growing issue for plan sponsors to contend with. Between 1997 and 2010, 14 new molecules with a price point above $100,000 per year were introduced into the Canadian market; between 2011 to 2020, another 34 high-cost molecules were introduced.
While only a small number of employees are taking these drugs, they “put a lot of pressure on plan sponsors,” said Gascon, noting pooling arrangements can reduce the risk, though pooling charges are also increasing significantly in response to the growing number of high-cost drugs.
He expects to see oncology, mental-health and weight-management drugs become significant cost drivers over the next five years. Referring specifically to weight-management drugs, he noted a U.S. study suggested the demand increase could be in the range of 24 to 27 per cent over that time frame. While employers may question the appropriateness of covering these drugs and worry about their high price point, Gascon noted obesity is connected to other conditions and a study found a 13 per cent reduction in weight correlated with significantly reduced risk of diabetes, hypertension and more.
Read: High-cost drugs remain primary cost driver for Canadian public, private drug plans: PMPRB
Plan sponsors can employ several strategies to lower their premiums, he said, including changing their co-insurance level, adding a deductible and limiting the pharmacist dispensing fee.
Many carriers have implemented prior authorization for high-cost or specialty molecules to make sure plan members are taking the appropriate medication, said Gascon. He also recommended plan sponsors consider generic substitution and biosimilar mandates; online pharmacies, which typically have lower dispensing fees; and pharmacogenetic testing.
On the fee side, he suggested plan sponsors periodically put out a request for proposals to ensure their carrier is giving them the best rates and test the recurring savings their carriers have against the market.
Plan sponsors can also evaluate whether their pooling threshold is appropriate, noted Gascon. If they’re willing to accept the risk of a higher threshold before the pooling protections kick in, they can benefit from recurring cost savings.
Read more coverage of the 2024 Healthy Outcomes Conference.