Protect your Plan from Rising Drug Costs
Spending on prescription drugs is steadily increasing in Canada. We now have the second highest drug prices in the world, after the United States. In 2015, Canadians spent $29.4 billion on prescription drugs, which represents 625 million dispensed prescriptions.
Specialty drugs account for just 2% of prescription drug claims submitted in Canada, but that actually represents 30% of total drug claim costs. These drugs allow people with debilitating conditions, such as multiple sclerosis or cancer, to lead normal lives or, in some cases, be cured. By 2020, it’s expected that the cost of specialty drugs will increase to 42% of total drug claim costs.
Controlling costs for affordable coverage
There are a number of available plan design options that can contribute to significant savings while still providing comprehensive benefits to your employees:
Mandatory generic drug substitution means that the pharmacist dispenses the lowest priced equivalent, usually the generic version, of the prescribed drug if one is available. Mandatory generic substitution ensures that all claims for drugs with a generic version are cut back to the lowest priced equivalent, even if a physician indicates on the prescription that there can’t be a substitution.
Co-insurance and co-pays are effective tools for cost sharing. Plan sponsors can set a per-prescription deductible and choose the percentage plan members are reimbursed for each claimed prescription.
Limiting dispensing quantities can help reduce waste and benefit dollars spent on drugs that cause adverse reactions. Most pharmacies will charge one dispensing fee regardless of whether you fill your prescription one-month at a time or three months at a time. If you are on a maintenance drug, have your Doctor prescribe a 3-month supply and you will save $10 to $23 in dispensing fees.
A dispensing fee maximum encourages plan members to research which pharmacy provides the best value. Average dispensing fees vary from around $5 to over $11. The higher the dispensing fee, the higher the cost applied to your group plan. Visit www.pharmacycompass.ca to review prescription costs at nearby pharmacies. Visit www.costcopharmacy.ca for efficient home delivery service information.
A drug plan maximum caps the amount of drug claims reimbursed in a calendar year.
Understanding the Trends
It is important to consider contributing factors:
• We have an aging population with a longer lifespan.
• More chronic conditions are being diagnosed and prescriptions for these conditions are increasing.
• More medical conditions are being diagnosed and treated earlier.
• Patients are driving demand for some treatments as they take a more proactive approach to their health.
• An increased number of new and more expensive specialty drugs are available to treat these chronic conditions.
As a plan sponsor, you know that escalating health-care costs mean rising premiums, which can result in more strain on your benefits budget.
Finding the right balance between plan benefits and plan cost is key to the overall success of your benefits plan.
Additional Tools for Consideration
One tool worth considering would be PPNs or preferred provider networks. Although they are not for everyone, we’ve seen great success using incentives to encourage plan members to be better consumers of the plan. The second would be a mandatory Pharmacare tie in for special authority drugs. Most insurers can now accommodate this but it’s important to have Pharmacare special authorization positioned as the first payer.
Schueler Group Benefits Corp offers a comprehensive range of drug plan options to meet the needs of your members. We’ll help you control drug costs without compromising the value of a benefits plan for your employees. Give us a call today!