High-cost drugs can be a health plan killer. Advisors can help plan sponsors mitigate the risks.
It’s up to advisors to help employers dodge the health plan executioner.
For plan sponsors anticipating the next high drug claim is like waiting for the guillotine to drop. That spectre is hanging over plan sponsors’ head at all times with the knowledge that even one claim could be catastrophic.
“You can’t foresee when that might happen and how are you going to handle that if it does,” said Stephen Frank, Vice President Policy Development and Health. “Brokers need to have conversation with their plan sponsors around strategies to mitigate that. Some of that’s pooling. Some of that’s having insurance. Some of it is sound formulary design. There’s all kind of strategies they should be talking about with their employer.”
It also helps to think ahead.
“That’s certainly a key one: how do you in advance of the problem get ahead of it and there are discussions now that will help us in the future when these claims become even more common,” he said.
That being said these claims are bound to happen.
“There are hundreds of these drugs now,” said Frank. “The way you sort of have to handle that now is through some sort of risk sharing approach where those really high costs are not borne by individual plans in individual provinces. Some of the provinces aren’t that large in terms of scale either. The way you address that is spreading that cost out among everyone and that’s the concept of pooling.”
Two years ago the CLHIA introduced a national pool, the Canadian Drug Insurance Pooling Corporation, for privately insured plans. In 2013 the pool paid out 4,200 claims over 25,000, which was about a 50 per cent increase over the year before. “It’s working extremely well. It’s quite an innovative thing.”
While these strategies will help the CLHIA is working on a more permanent solution.
Let’s say there was a 20 per cent reduction in price – that would drop a drug from $100,000 to $80,000. “That $80,000 is still going to be a challenge to sustain,” said Frank. “So you have to be doing a whole bunch of things to better manage the system. There’s no silver bullet. There has to be a package of changes.”
That package has to start nationally and provincially. “Our view as private payers is we want to be working more closely with government on finding solutions,” he said. “We know what needs to be done. We just need to find the will to do it and I think we can make a lot of good if we start working together in the future.”
Over a five-year period (2008 - 2013), IMS Brogan reported that biologic and specialty drug costs by pay-direct private drug plans in Canada grew from approximately 12 per cent of total drug spending to approximately 21 per cent of total drug spending ($1.3 billion).
For plan sponsors anticipating the next high drug claim is like waiting for the guillotine to drop. That spectre is hanging over plan sponsors’ head at all times with the knowledge that even one claim could be catastrophic.
“You can’t foresee when that might happen and how are you going to handle that if it does,” said Stephen Frank, Vice President Policy Development and Health. “Brokers need to have conversation with their plan sponsors around strategies to mitigate that. Some of that’s pooling. Some of that’s having insurance. Some of it is sound formulary design. There’s all kind of strategies they should be talking about with their employer.”
It also helps to think ahead.
“That’s certainly a key one: how do you in advance of the problem get ahead of it and there are discussions now that will help us in the future when these claims become even more common,” he said.
That being said these claims are bound to happen.
“There are hundreds of these drugs now,” said Frank. “The way you sort of have to handle that now is through some sort of risk sharing approach where those really high costs are not borne by individual plans in individual provinces. Some of the provinces aren’t that large in terms of scale either. The way you address that is spreading that cost out among everyone and that’s the concept of pooling.”
Two years ago the CLHIA introduced a national pool, the Canadian Drug Insurance Pooling Corporation, for privately insured plans. In 2013 the pool paid out 4,200 claims over 25,000, which was about a 50 per cent increase over the year before. “It’s working extremely well. It’s quite an innovative thing.”
While these strategies will help the CLHIA is working on a more permanent solution.
Let’s say there was a 20 per cent reduction in price – that would drop a drug from $100,000 to $80,000. “That $80,000 is still going to be a challenge to sustain,” said Frank. “So you have to be doing a whole bunch of things to better manage the system. There’s no silver bullet. There has to be a package of changes.”
That package has to start nationally and provincially. “Our view as private payers is we want to be working more closely with government on finding solutions,” he said. “We know what needs to be done. We just need to find the will to do it and I think we can make a lot of good if we start working together in the future.”
Over a five-year period (2008 - 2013), IMS Brogan reported that biologic and specialty drug costs by pay-direct private drug plans in Canada grew from approximately 12 per cent of total drug spending to approximately 21 per cent of total drug spending ($1.3 billion).
