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Normandin Beaudry

The Ten Most Important Developments in Drug Insurance in 2016

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There, in black and white

NB Bulletin Vol. 20 N. 3, January 2017

Two key elements particularly affected drug insurance in 2016: the increase in private drug insurance plan costs and significant legislative changes.

The concerted actions of the group of plan sponsors and the Canadian Life and Health Insurance Association (CLHIA) also allowed for progress in Quebec's legislative context.

In keeping with the new tradition established in 2015, this bulletin presents the developments in 2016 that we believe have had the greatest impact on private drug insurance plans.

1. Reversal relative to the public subsidy for assisted reproduction
2. Passing of Bill 81 that allows the Quebec government to implement a request for proposals process for generic drugs
3. Actions taken by the group of plan sponsors and the CLHIA
4. Passing of Bill 92
5. Drugs for treating Hepatitis C
6. Development of biologic drugs to treat chronic conditions
7. End of the "do not substitute" clause for Remicade in Quebec
8. Increase in pooling fees charged by insurers
9. Limit on the number of dispensing fees reimbursed annually in Ontario
10. Limit on the number of blood glucose test strips reimbursed in Quebec


The legislative context continued to change in 2016. Outlined below are developments relating to certain bills introduced in 2015. 

1. Reversal relative to the public subsidy for assisted reproduction

The passing of Bill 20 in November 2015 put an end to the public subsidy for assisted reproduction. In June 2016, the Quebec government reversed itself, confirming that the RAMQ will continue to cover fertility drugs, making it mandatory for private plans to continue to cover these expenses. Reimbursement criteria for these types of drugs has, however, been tightened.

2. Passing of Bill 81 that allows the Quebec government to implement a request for proposals process for generic drugs

Bill 81 was passed in June 2016, enabling the Quebec government to negotiate agreements with generic companies. The good news is that private plans will be able to benefit from reduced drug costs. On the down side, there will be less incentive for generic companies to provide kickbacks to pharmacists, and lower kickbacks could prompt pharmacists to increase their professional fees for drugs used by individuals insured under private plans. Because the government has yet to complete a request for proposals process in connection with Bill 81, we are still waiting to see how this process will impact private plans.


In the context of Bill 92 that was tabled in 2015, the CLHIA and the group of plan sponsors joined forces to gain access to tools designed to better control private plan costs. The group of plan sponsors currently consists of 50 organizations representing 400,000 insured individuals in Quebec.

3. Actions taken by the group of plan sponsors and the CLHIA

In December 2015, the group of plan sponsors sent a letter outlining various issues to the Minister of Health and Social Services and the Minister of Justice. In May 2016, the CLHIA submitted a brief to the Committee on Health and Social Services presenting these same issues, i.e., a framework for and the transparency of pharmacists' professional fees, access to agreements negotiated by the government and the possibility of entering into such agreements. Also in May 2016, the CLHIA published survey results indicating that 80% of Quebecers are unaware that they pay professional fees to pharmacists. This is why greater transparency is required on receipts issued at the pharmacy.

4. Passing of Bill 92

In reaction to strong pressure from the plan sponsors and the CLHIA, the Quebec government amended Bill 92 to include some changes that will impact private plans. For example, effective September 15, 2017, receipts issued by pharmacists must list their professional fees as a separate line item, which will enforce greater transparency. Bill 92 also bans loyalty programs offered by pharmaceutical companies. The passing of Bill 92 is a step in the right direction despite the fact that several issues, including the widening gap between public plan and private plans drug costs, have not been addressed.


Pharmaceutical companies continue to invest heavily in developing very expensive biologic drugs.

5. Drugs for treating Hepatitis C

Several very expensive drugs ($60,000 to $160,000 per treatment) that have proven to be highly effective in treating Hepatitis C have entered the market in recent years. In 2015, in an effort to spread the impact on public finances over a few years, the RAMQ decided that, at first, only the most affected patients would be reimbursed for this treatment. The first wave of costs observed in 2015 did not reach the level initially expected by the market. In 2016, the RAMQ agreed to cover the cost of this treatment for patients with earlier stage Hepatitis C. Preliminary statistics indicate that a second wave of claims should be expected, but that total costs should be lower than those for the first wave.

6. Development of biologic drugs to treat chronic conditions

Biologic drugs are currently being developed to treat common chronic conditions including asthma and migraines. The annual cost of these drugs can reach up to $25,000 per insured individual. These drugs could have a significant impact on drug insurance plan costs, given the high prevalence of these conditions among the population. In addition, in June 2016, the RAMQ finally approved the cholesterol-lowering drug Repatha for the treatment of certain rare genetic disorders. It is thus important to ensure that the right cost control measures are in place in private plans to avoid cost increases associated with this drug.

7. End of the "do not substitute" clause for Remicade in Quebec

The drug that accounts for the highest total costs for private plans is Remicade. Remicade is used to treat rheumatoid arthritis. It should be noted that there is a biosimilar version of Remicade called Inflectra. Biosimilar biologic drugs are drugs that can be used for the same therapeutic indications as reference biologic drugs, but that cost 30% to 50% less than their reference counterparts. As of October 2016, an individual insured by the RAMQ who opts to purchase Remicade instead of Inflectra will have to pay the difference in cost. Some insurers are not currently applying this measure. A number of biosimilar biologic drugs are set to hit the market over the next 24 months. With the right cost control measures in place, private plans could enjoy significant cost savings.


The arrival of high cost drugs continues to affect pooling fees.

8. Increase in pooling fees charged by insurers

Pooling fees for private plans once again increased significantly in 2016. Given this situation, it is necessary to question the functioning of this insurance mechanism. Normandin Beaudry's white paper entitled "A Solution for Private Drug Plans" suggests avenues for reflection to go about this. Although the white paper was published in 2013, and despite significant cost increases since then, no insurer has come up with an effective solution.


Different governments are also taking steps to control costs.

9. Limit on the number of dispensing fees reimbursed annually in Ontario

Since late 2015, Ontario has been limiting the number of dispensing fees paid to a maximum of five dispensing fees per maintenance drug per year. This measure is an incentive to insured individuals to purchase a 90-day supply of their drugs, which reduces dispensing fees and generates substantial savings. The 90-day dispensing rate is significantly lower in Quebec than in the rest of Canada. To benefit from these potential savings in Quebec, it would be advisable to implement incentives that would encourage the purchase of a longer supply of maintenance drugs. Some insurers started to put forward solutions in 2016.

10. Limit on the number of blood glucose test strips reimbursed in Quebec

A study completed by the Institut national d’excellence en santé et en services sociaux (INESSS) recommends limiting the number of blood glucose test strips reimbursed annually depending on the severity of the diabetes. It should be noted that all of the other Canadian provinces have already imposed measures to control the excessive use of test strips. The study reveals that a high percentage of test strip users do not use the strips correctly leading to no improvement in the user's health. Annual savings of between 15 and 40 million dollars are expected if and when this measure is implemented for the public plan. Moreover, a recent study1 suggests that limiting the number of test strips would not impede diabetes management. We are waiting to learn whether or not the RAMQ will implement the recommendation made by the INESS. If it does, private plans could also apply a reimbursement limit.

[1] Association of a Blood Glucose Test Strip Quantity Limit Policy with Patient Outcomes: a population-based study, Tara Gomes, Diana Martins, Mina Tadrous et al, Journal of American Medical Association Internal Medicine, 2017, p. 61-66


The amendments to Bill 92 are a step in the right direction. We must, however, continue to lobby the government to reduce the inequities between the public plan and private plans.

One reality remains certain: the cost increase is real and it is each plan sponsor's responsibility to ensure sound governance and protect against the risks specific to its plan. In a context where each plan is unique, indicators for identifying risks associated with drug consumption should be used to develop a relevant risk control strategy. The Normandin Beaudry consultants can support you in implementing these strategies focused on plan design, communication and prevention.
   

 

Please feel free to contact us for additional information.

514.285.1122
 
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Montreal, Quebec, H3B 1S6