Health insurers’ co-op reveal how exorbitant drug costs have made their organisation vital to industry’s overall well-being
The increasing cost of drugs in Canada is putting real strain on supplemental health insurers across the country. The Canadian Drug Insurance Pooling Corporation (CDIPC) was established in 2011 as a result of this pressure, and the group’s executive director Dan Berty believes that without this system many employers would have to opt out of drug benefit plans.
"As each year goes by, it is abundantly clear that without drug pooling in place, many smaller and mid-size employers would be forced to drastically reduce or outright eliminate their drug benefit offerings to employees," he says.
The CDIPC is a collaboration between 24 insurance companies across Canada that collectively represent 100% of the supplementary drug market. The cost burden of providing benefits for certain drugs would mean premiums increasing substantially, something that would put them out of the reach of many small and medium-sized businesses. According to data from CDIPC, the costs of expensive and recurring drug treatments in 2015 increased 22% over the previous year.
Auto-immune related diseases continue to be the primary driver of high-cost drug use, but newer cancer drugs, blood disorder drugs such as Soliris and Hepatitis C drugs are now making a sizable impact on industry pooling also. This point is driven home by the fact that Hepatitis–C drug Harvoni accounted for $3 million in paid claims in 2014, but that number rose to $42 million in 2015.
The pooling system has never been more needed, says Berty, who explains exactly how CDIPC works.
“The corporation shares the costs through a polling mechanism of plan members that have repeating drug claims (two years or more) in excess of $32,500 per year,” he says. “What the CDIPC does is share these costs among all the insurers, making for a more even inflationary rate across the board.”
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"As each year goes by, it is abundantly clear that without drug pooling in place, many smaller and mid-size employers would be forced to drastically reduce or outright eliminate their drug benefit offerings to employees," he says.
The CDIPC is a collaboration between 24 insurance companies across Canada that collectively represent 100% of the supplementary drug market. The cost burden of providing benefits for certain drugs would mean premiums increasing substantially, something that would put them out of the reach of many small and medium-sized businesses. According to data from CDIPC, the costs of expensive and recurring drug treatments in 2015 increased 22% over the previous year.
Auto-immune related diseases continue to be the primary driver of high-cost drug use, but newer cancer drugs, blood disorder drugs such as Soliris and Hepatitis C drugs are now making a sizable impact on industry pooling also. This point is driven home by the fact that Hepatitis–C drug Harvoni accounted for $3 million in paid claims in 2014, but that number rose to $42 million in 2015.
The pooling system has never been more needed, says Berty, who explains exactly how CDIPC works.
“The corporation shares the costs through a polling mechanism of plan members that have repeating drug claims (two years or more) in excess of $32,500 per year,” he says. “What the CDIPC does is share these costs among all the insurers, making for a more even inflationary rate across the board.”
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