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Prescription for Disaster
Advances in pharmaceuticals are threatening your drug plan

Modern medicine continues to discover innovative treatments for a broad array of diseases, giving patients a new lease on life. The irony is that these same medical advances are also threatening the health of drug plans that help to offset the related costs.

Consider the steps that have been taken to care for more than 300,000 Canadians infected with Hepatitis C. An older generation of drugs will cure about half those who receive a prescription. (Less than half of those with Hepatitis C know they have the disease.) To compound matters, significant side effects can emerge through the 12-month treatment plans.

Enter the latest generation of drugs that promises a 90% cure rate and fewer side effects during treatments that last between 12 and 24 weeks.

Good news, right? But the drug costs about $100,000 per patient. If every Canadian with Hepatitis C used it, the costs would amount to $30 billion. To put that into context, Canadians annually spend $23.3 billion on all drugs combined.

Not only that, but we can expect more people to be diagnosed. The Public Health Agency of Canada, for example, is encouraging the screening of injection drug users or immigrants from high-risk countries. The Canadian Liver Foundation is going a step further and suggesting screening for everyone born between 1945 and 1975.

It isn't the only example of higher drug costs to come. Many people who read this blog will be taking some form of medication for high levels of cholesterol. Scientists have since identified a gene that regulates LDL receptors, controlling the way the liver can clean bad cholesterol from blood. The antibody known as ecolocumab is injected every two to four weeks, at a cost of $7,000 to $12,000 per treatment. It would potentially cost $2.6 billion a year, or about 11% of the overall amount spent on drugs today.

A decade ago, only one prescription came with a price tag above $75,000. Now there are more than 600. Even while pooling arrangements can share the cost of the expensive drugs, the price of this support has caused some plan premiums to jump as much as 20 to 150%.

Then there is an unavoidable demographic shift as the population ages, leading to an inescapable increase in chronic diseases that require pharmaceutical support.

Nobody is suggesting that people should be denied the drugs that will dramatically improve their health, but costly medications are increasing the strain on drug plans. Workplaces that want to sustain their plans will have to explore strategies that can help to keep costs under control.

It begins by taking a closer look at existing claims. Benefits advisors can break down the types of drugs being purchased, to help see if more cost-effective options might be available. Alberta Blue Cross recommends that certain drugs should only be covered after special authorization, which involves medical practitioners specifically requesting coverage on certain drugs. There is no rubber stamp.

Plans can be further refined to reduce other economic pressures. Increases in the deductibles for dispensing fees and their frequency can encourage employees to combine orders, reducing an administrative cost. Deductibles per prescription, meanwhile, will often encourage people to explore the option of generic medications with their physicians. Plan holders can be encouraged to use pre-approved pharmacies with better rates, and ask physicians about available generic treatments.

A long-term commitment to workplace health will make a difference of its own. Wellness programs adopted to encourage healthy habits from diet to exercise can help reduce the need for maintenance drugs. There's no mistaking the fact that a health-minded workforce is less likely to develop conditions such as Type 2 diabetes and cholesterol. The threat of heart attacks and strokes can drop as well.

Ultimately, everyone has a role to play in reducing the costs. With paramedical fees now accounting for as much as 40% of some medical claims, it may be time for tough decisions. The person looking to book an extra massage or dental cleaning just because there is room in the plan may want to ask themselves if the added expense is worth it, especially if the strain can threaten the sustainability of the overall plan.

Continuing business as usual is simply a prescription for disaster.

Top Tips:

  • Ask benefits providers to track the specific drugs being used in your workplace, to see if cost-effective options are available.
  • Educate employees about the factors that are increasing the costs of drug plans. When well-informed, everyone is more likely to embrace cost-saving strategies.
  • Encourage plan holders to use pre-approved pharmacies with better rates, and to ask physicians about available generic treatments.

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The Buzz Bits
Miscellaneous links to interesting benefits information

Five tips to an engaged workforce: Your Workplace

Providing benefits is a large expense for employers: Benefits Canada

Obesity is a chronic disease: novo nordisk

The dilemma of expensive drugs: smallbizadvisor

Specialty drug management solutions: Medication Management

Community Ethics, Big City Expertise

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