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A Prescription for Your Drug Plan
Skyrocketing drug prices may be threatening your benefits plan, but generic drugs offer a cure

The drug "Soliris" must seem like nothing short of a miracle to patients with a life-threatening bone marrow disease known as Paroxysmal Nocturnal Haemoglobinuria (PNH). Half of the 80 or 90 Canadians with PNH would die within a decade if they were untreated. Now they can enjoy a normal life expectancy by taking the drug every two weeks.

All it costs is $500,000 a year!

It is an extreme example of soaring drug prices. After all, "Soliris" has been recognized as one of the most expensive drugs in Canada. But there is no question that prescription costs are all on the rise. A course of a new cancer drug can cost more than $20,000 when it is taken at home, and emerging therapies known as “biologics” – a class of genetically engineered drugs – are coming with steep price tags of their own.

It adds up to an uncomfortable fact: The same drugs that promise to improve patient health could kill the drug plans used to pay for the medication. At the very least, soaring costs can push a plan’s rates higher, introduce tight restrictions on formularies which identify approved drugs, or force people to turn to the Trillium Plan that bases rates on incomes but only has a formulary that covers a short list of drugs.

Prescription drug plans are not a bottomless well. Pooled plans traditionally limit the amount of claims that can be submitted every year, and a plan’s rates will increase along with payments. To compound matters, a company with an aging workforce can expect more claims with every passing year.

Yet employees value these benefit plans. A majority of those questioned in the Sanofi-Aventis 2011 Healthcare Survey said they would rather keep benefits than take $20,000 in cash. There should be little surprise. Higher salaries would be subjected to payroll and income taxes, while group benefits programs are tax-free for employees and a tax-deductible business expense for employers.

Plan holders can help to protect this valuable coverage, largely by asking their doctors for generic medications whenever they exist.

Generic drugs need to carry the same approvals from the federal government, yet cost less than half the price of their brand name counterparts. The differences in the medications are usually limited to nothing more than the binders that hold active ingredients together. The lower price reduces the strain on drug plans, and will offer welcome savings whenever someone has to approach a pharmacist’s cash register to pay their share of the bill.

Then again, another valuable strategy can avoid a trip to the drug store’s cash register altogether. Plan administrators can help to lower costs by using Preferred Provider Pharmacies. These companies deliver discounted prescriptions by mail, and help plan holders to avoid the delays at a pharmacist’s counter which are timed to encourage extra shopping elsewhere in the drug store.

The ultimate goal is to find the right drug for the right patient. But when that is combined with a commitment to finding the best price, any drug plan will also enjoy a longer, healthier life.

Top Tips:

  • Ask your doctor about available generic drugs that offer the same medical benefits for a fraction of the price.
  • Consider using a Preferred Provider Pharmacy, which will offer drugs at a reduced rate.
  • Study the drug plan’s formulary to identify the specific drugs that are covered.

The Buzz Bits
Miscellaneous links to interesting benefits information

Mylan Pharmaceuticals has launched a new online resource, called www.ChoosingGenerics.ca, to help Canadians learn about generic drugs.

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