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Normandin Beaudry

The ten most important developments in drug insurance in 2017

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There, in black and white

NB Bulletin Vol. 21 No. 2, January 2018

For private plan sponsors seeking to contain costs, any new development in the world of drug insurance may represent an opportunity to save money, or a risk to be avoided. But there’s no denying it: the sheer quantity of interventions by a large number of players (governments, insurers, pharmacists and pharmaceutical companies) makes for a complex landscape that is difficult to navigate. That’s why we are presenting the third edition of our list of the year’s top developments, which we have put together to help informed plan sponsors identify the most promising courses of action. 

Here are the 10 developments of the past year that we believe have had the greatest impact on private drug insurance plans.

1.   Launch of the universal drug program in Ontario (OHIP+)
2.   Legislative changes in Quebec
3.   Series of changes to the Quebec Public Prescription Drug Insurance Plan
4.   New standards for drug pricing in Canada
5.   Introduction of new and expensive drugs 
6.   Arrival of new biosimilars
7.   Multiplication of high-cost drug review programs 
8.   No quote owing to high-cost claimants
9.   Emerging pharmacy models 
10. Flash response by private plan sponsors in Quebec


In 2017, governments introduced a number of changes to public drug insurance plans and the legislation that governs them.

1. Launch of the universal drug program in Ontario (OHIP+)

On April 27, 2017, the Ontario government announced that a free universal drug program would be offered to all persons under the age of 25 beginning on January 1, 2018, regardless of coverage under a private plan. This public program, which is now in effect, is the first payer. No out-of-pocket payment is required by insureds (deductible, coinsurance or premium) and all prescription drugs reimbursed under the Ontario Drug Benefit program are covered. The arrival of OHIP+ therefore represents savings for private plans with insured individuals under 25 years of age in Ontario (employees and dependants).

2. Legislative changes in Quebec

Since September 15, pharmacists have been required to provide a breakdown of the cost of each drug on the receipts they issue to their customers. This disclosure requirement arose from the coming into effect of Bill 92. The truth is that the desired outcomes of this measure have been slow to materialize, as the itemized receipts contain much information and insured individuals may have trouble making sense of them. Plan sponsors would be well advised to ensure their plan members check the pharmacist’s professional fees on their receipt. Given that this amount may cause the cost of a drug to vary considerably from one pharmacy to another, it has a direct impact on the cost of group benefit plans.

On July 16, the Quebec government announced that a request for proposals process for generic drugs would not be implemented, despite the provisions of Bill 81. Instead, a confidential agreement was reached with generic drug manufacturers. At this stage, we can only hope that these agreements will be beneficial for private plans as well.

On November 23, Bill 148 was adopted, requiring pharmacists to limit their generic drug purchases from a single manufacturer to 50% of the annual value of such purchases. It is still too early to determine the effect this may have on drug pricing. We will be following this issue closely in the coming months.

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3. Series of changes to the Quebec Public Prescription Drug Insurance Plan

The changes include the following: limit on the number of blood glucose test strips, proton pump inhibitors (PPI) used to treat gastric ulcers and reflux limited to 90 days per year, and removal of Remicade from the list of covered drugs. Private plans in Quebec are required to reimburse, at a minimum, what is covered by the public plan, so these changes represent interesting savings opportunities. However, insurers are not yet able to administer these measures under private plans. We are working closely with them to make these measures available for private plans as quickly as possible and thus control the associated costs.

4. New standards for drug pricing in Canada

The Patented Medicine Prices Review Board (PMPRB) is a committee under federal jurisdiction whose responsibilities include limiting the prices for patented medicines to ensure they are not excessive. To determine prices in Canada, the committee compares them with those of other industrialized countries. In December, the PMPRB announced changes to the reference market, including the removal of the United States. Since drug costs are higher south of the border, this change will likely lower the cost of drugs entering the Canadian market.

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Pharmaceutical companies continue to invest heavily in drug development.

5. Introduction of new and expensive drugs 

Drugs recently brought to market by some companies for the treatment of rare conditions may cost as much as $2 million annually. The past year also saw the introduction of drugs to treat common chronic conditions such as eczema, psoriasis or chronic liver conditions, which could add up to several tens of thousand dollars each year. The introduction of expensive drugs was not a new development in 2017, and there is little doubt that this trend will continue in years to come. 

These new molecules drive up annual drug costs at a rate much greater than general inflation and threaten the sustainability of private drug plans. 

6. Arrival of new biosimilars

Biosimilars are drugs that have the same therapeutic effects as reference biologic drugs, but cost up to 50% less. Many biosimilars have been introduced, among them Brenzys (Enbrel biosimilar), which quickly established itself in the Canadian market when it was approved as the preferred treatment in 2017 in all Canadian provinces except Newfoundland. Another biosimilar by the name of Renflexis, this time for Remicade, was approved by Health Canada in late 2017. In no time, competition will appear on the biosimilars market, which will have a beneficial effect on drug costs.

Note that some insurers do not favour the reimbursement of biosimilars when they have entered into confidential agreements with pharmaceutical companies that produce reference biologic drugs. Because insurers do not all have the same approach, it is important for plan sponsors to be familiar with their insurer’s drug management strategies so that they can make the right choices.

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In reaction to high-cost drugs on the market, both now and in the future, insurers are reviewing their drug benefit offering.

7. Multiplication of high-cost drug review programs 

In recent years, some insurers have introduced programs designed to monitor drug-related cost increases. In 2017, the number of these programs multiplied. Their primary goal is to assess the cost-effectiveness of drugs being brought to market, in order to determine whether they will be covered or not by the insurer or under what conditions, if any. These programs generate savings under private plans, as they allow payment only for the most effective drugs at the lowest cost.

8. No quote owing to high-cost claimants

In Quebec, we are starting to see many insurers that are reluctant or refuse to quote when groups with very high-cost claimants go to market. This phenomenon is already prevalent outside Quebec, where it is more and more common to see groups condemned to stay with their existing insurer because of high claimants. The time is ripe for the industry to take a serious look at this issue. Normandin Beaudry’s White Paper – A Solution for Private Drug Plans provides food for thought in this regard. Even five years after its publication, the topic is still relevant today.

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Some pharmacists are reviewing their business model by adapting to new realities.

9. Emerging pharmacy models

The range of services provided by pharmacists has diversified significantly in recent months. New pharmacy models have been introduced, some with a focus on affordable pricing, others on promoting health. The way in which services are delivered to patients has also changed with the opening of new mail-order pharmacies and consultation-focused pharmacies. So that their plan members make informed choices about their pharmacy, plan sponsors should inform them of the full range of services they can obtain.

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Plan sponsors joined in a common front against a RAMQ regulation. 

10. Flash response by private plan sponsors in Quebec

In reaction to a RAMQ statutory regulation slated for publication in June, 70 or so employers representing close to 400,000 Quebec insured individuals rallied together in just one week. The RAMQ’s response was favourable, and the regulation was scrapped. Had it not been for the group’s quick action, disclosure on pharmacy receipts would not have applied to private plans and a ban on applying caps on pharmacists’ fees would have been in effect. 

Let’s hope that this enthusiasm for concerted action continues in 2018, as other situations impacting private plans are cause for concern, not least of which is the widening costs separating them from the public plan.

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The events outlined above may have been the year’s top developments, but many others reshaped the landscape in 2017 and more will follow in 2018. We can only urge plan sponsors to remain vigilant in an effort to understand the specific risks that each change may represent for their plan and the valuable opportunities that should not be missed. 

To better shield their plans from cost increases, sponsors would be well advised to develop a unique strategy founded on the optimal plan design, targeted communication, and a preventative attitude. In that regard, our specialists can provide you with personalized support. 

 

Please feel free to contact us for additional information.

514.285.1122
 
630, René-Lévesque Blvd. West, 30th floor
Montreal, Quebec, H3B 1S6