February 2022
The Top 10 Developments in Prescription Drug Insurance of 2021
Similar to 2020, 2021 will have been notable for the COVID-19 pandemic. Despite this, the prescription drug insurance industry has been constantly changing. Here is the 7th edition of our top prescription drug developments.
1. The shift to biosimilars continues across Canada
2. Approaches to managing biosimilars within private plans are diversifying
3. Reform of the Patented Medicine Prices Review Board postponed
4. National pharmacare plan: a first step
5. Record-breaking use of single-dose prescription drugs
6. Effect of costly prescription drugs on group insurance plans’ financial arrangements
Building on the movement started by British Columbia and Alberta in 2020, two other provinces announced that they would adopt a policy to transition towards biosimilars. In April 2021, New Brunswick announced its transition policy, which would take effect on December 1, 2021. In May 2021, Quebec also announced that its policy to transition towards biosimilars would take effect in April 2022.
Remember that these transition policies ensure the plans’ sustainability and their financial health. By opting for biosimilars, the savings achieved can reach 50% of the cost of the reference biologic drug.
Other provinces, including Ontario and Nova Scotia, are expected to join the movement in the coming year. We are keeping watch and will inform of you any changes in the market.
Further to the Quebec government’s announcement, insurers have adopted several approaches to managing biosimilars. Some have imposed a mandatory shift while others have preferred to let the policyholder decide. The choice of method to transition towards biosimilars also varies based on the insurers. Some have removed biologic drugs from the list of prescription drugs reimbursed by the plan while others have proceeded with a “biosimilar substitution,” meaning the reference biologic drug is reimbursed based on the price of the biosimilar. The list of biosimilars covered by these different approaches varies based on the insurers, which contributes to the increase in disparities.
The confidential price agreements reached with the reference biologic drug manufacturers have certainly had an impact on the insurers’ approach.
The disparity in approaches to managing biosimilars brings about its share of issues for private plan sponsors who could eventually require their insured members to adopt a biosimilar, such as in the case of a change to an insurer that promotes the transition. In Quebec, certain issues may arise during the integration with the RGAM, such as when an insured member loses their private plan coverage without having made the transition, or when an insured member of a private plan turns 65 and the RGAM’s coverage acts as the first payer. The insured member would be required to transition towards the biosimilar.
A standardized market approach would have allowed for a harmonious transition and a more pleasant employee experience. A change in insurer practices based on new provincial announcements must be monitored closely because it will require private plan sponsors to adapt.
The reform of the PMPRB announced in 2019 continues to be postponed. The implementation is now planned for July 1, 2022, due to—among other things—COVID-19. The purpose of this reform is to reduce the price of prescription drugs sold in Canada by modifying the reference basket of comparison countries, through the addition of certain countries and the exclusion of the United States and Switzerland, which have some of the highest prices in the world.
These repeated delays have us wondering if this reform, which would help drive down private plan costs, will ever be implemented.
COVID-19 has certainly changed the Canadian government’s priorities. Although the national pharmacare plan didn’t make headlines in 2021, the project hasn’t been shelved.
Last August, Canada’s Minister of Health and Prince Edward Island’s Health and Wellness Minister announced an initial agreement “aimed at expediting the implementation of a national universal pharmacare plan.¹” An amount of $35 million will be paid over four years to the province so that it can expand its drug list and reduce insured members’ costs. This investment will allow Prince Edward Island to post a drug list that is similar to the other Maritime provinces.
This is the first formal commitment made by the government to introduce a national pharmacare plan.
Despite the topic not being covered in the latest Throne Speech, we will wait until the 2022 budget to see where national pharmacare fits into the Government of Canada’s priorities. We’ll then analyze the potential effects on private plans.
Zolgensma®, which was approved by Health Canada, is the first gene therapy to treat spinal muscular atrophy. This drug is breaking all records with a cost of $2.8 million for a single dose. Prescription drug fees continue to grow, which puts pressure on private plans.
In the past, other treatments—like Strensiq®, Vimizim®, or Soliris®—have affected private plans due to their prohibitive costs. However, new one-time cost therapies will create other private plan funding issues. For the time being, the cost of Zolgensma® shouldn’t have repercussions on private plans because several provinces will guarantee funding through hospitals and special programs.
We believe that costly prescription drugs for rare illnesses should be reimbursed by the federal government. Read our white paper on the national pharmacare plan to learn more about our position on this topic.
In recent years, grievances and lawsuits relating to the non-repayment of a costly drug claim to a self-insured plan resulted in the insurer being forced to pay the claim. In 2021, we saw increased awareness of the inherent risk to high claimants in self-insured plans. This threat drove several employers to modify their financial arrangements.
In a self-insured plan, the pooled insurance could not apply if the employee sues for coverage of a costly prescription drug. As such, employers have every interest to adopt a financial arrangement based on two-way retention, which protects better against the risk of lawsuits while allowing them to take on the same risk as the self-insurance.
Major scientific advances for certain chronic illnesses are continuing. A strategic collaboration between CRISPR and ViaCyte has brought about the first gene replacement therapy for the treatment of type 1 diabetes, without immune system suppression. The clinical trial approved by Health Canada would help to treat this chronic illness, which affects a significant portion of the population.
The success of this therapy remains to be seen, but we can already imagine the positive impact on affected insured members and their private plans: a possible reduction in drug costs and blood sugar monitoring devices and improved attendance at work.
One question remains for all gene therapies: how can significant non-recurring costs be covered and who will pay the bill? Discussions will have to take place between the various stakeholders about this financial risk we face.
The CHUM is conducting a clinical trial for an experimental cancer treatment pill. Sixty patients in Vancouver, Edmonton and Toronto are participating. This pill targets cancerous cells and spares normal cells, which greatly reduces side effects. This is a major scientific advance.
The pill would be taken once a day at home. This new precision medicine could have significant impacts on private plans if the costs were transferred from hospitals to private plans.
The future of science promises other advances that will allow patients to improve their conditions. Private plans will have to adapt and improve their cost control measures so that they can cover the reimbursement of these innovations.
We haven’t seen a significant increase in prescription drug costs since the start of the COVID-19 pandemic. However, the situation could change in the future. Delays in follow-ups, diagnoses and surgery, the significant offloading in recent weeks and perceived mental health issues will ultimately result in an increase in prescription drug consumption once these numerous diagnoses resurge.
Given all of the human resources issues that have accumulated during the pandemic, there remains little interest in prescription drug management, despite the potential effects on private plan costs. Throughout 2021, we have held several discussion groups with private plan sponsor, who confirmed that prescription drug insurance wasn’t one of their priorities. However, we recommend monitoring the evolution of prescription drug expenses in group insurance plans to avoid any surprises. The sleeping giant shouldn’t be ignored.
Employers are looking more and more into the issue of diversity and inclusion in their group insurance plans. Prescription drug coverage varies greatly from one plan to another. Numerous classes of prescription drugs that cover, for example, obesity, infertility, smoking cessation, gender affirmation or contraception are part of the prescription drugs tied to equity, diversity and inclusion. A caring employer may decide to include these prescription drugs or review the maximums to ensure adequate coverage for these health conditions.
Several questions remain with regard to the coverage and reimbursement of prescription drug insurance. Consider, for example, the reimbursement of contraceptives, which varies from one plan to another based on the type of contraception chosen, or gender affirmation coverage, which differs from one province to the next. Some insurers explored this issue and now offer a greater diversity of coverage for certain therapeutic classes or coverage that supplements provincial plans.
We will continue to monitor changes in the market on this current topic in prescription drug insurance.
Need personalized support? Contact our experts to fully understand the existing or potential impact of these changes on your prescription drug insurance plans.