October 2018

High-cost drugs: More than a matter of money

The cost of prescription drugs in Canada has soared in recent years. This increase is due, among other things, to the growing consumption of high-cost drugs. For example, in Canada in 2017, it was estimated that out of an insured population of 1,000 individuals, 10 of them consumed approximately 33% of total drug costs.¹

Furthermore, group benefits plans dealing with high-cost drug claims are also facing new constraints: adverse selection of insureds and difficulties in changing insurers. In this article, we will examine two real-life cases that recently affected our clients, and which should prompt private plan sponsors to review how they operate.

Case 1: The importance of eligibility rules

Some insured individuals whose plan does not cover their high-cost drugs decide to opt out of their plan and obtain coverage under their spouse’s plan, which reimburses the drug in question. Therefore, plans that lack rigorous management or those with more generous coverage are exposed to additional risks.

The implementation of eligibility rules can help restrict the entry of new insureds in the plan. For example, these rules can stipulate that if an employee chooses to opt out, they can only re-enroll again following a life event.  These types of rules help put a stop to individuals who “shop around” for their plans depending on their evolving needs, therefore preventing additional costs.

While flexible plans may include such rules, historically, traditional plans do not. Ensuring that all plans have clear rules regarding eligibility would be prudent.

Case 2: Difficulties in changing insurers

To avoid exposing themselves to significant risks, some insurers may refuse to respond to a request for proposals due to high-cost drug claims. Plan sponsors must therefore ensure that all available cost control measures are in place to minimize the repercussions of these types of claims and present a better picture of their plan.

One thing is for certain: for all plans, when reimbursing a prescription drug, it is imperial to pay for the right molecule, at the right time and at the right price. To facilitate this process, many cost control measures exist, such as:

  • Coordinating benefits with the government and pharmaceutical companies
  • Instituting prior authorization
  • Introducing step therapy
  • Promoting biosimilars
  • Implementing a managed drug formulary

Finally, plan audits help ensure that each party adequately fulfills its responsibilities and that cost control measures are properly administered.

An action plan is essential

The cost control measures and eligibility rules presented in this article can help plan sponsors optimize risk management and improve their record in the eyes of insurers. However, there are no measures or rules that can completely eliminate risk. Contact us if you think your plan is not in the best position to deal with high-cost drug claims. Normandin Beaudry’s specialists would be happy to discuss possible solutions and guide you through a management approach customized to your situation.

The federal government is currently studying the possibility of implementing a national pharmacare program, which could provide possible solutions to the issue of reimbursing high-cost drugs and resulting adversities. While it is too early to comment on the real impacts of such a plan, rest assured that we are following any developments and will keep you informed.


¹ According to Normandin Beaudry’s databases for 2017.

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Contact your Normandin Beaudry consultant or email us

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