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January 2020

Top 10 Drug Insurance Developments of 2019

1. Switch to biosimilars: British Columbia and Alberta lead the way

2019 was a pivotal year for the use of biosimilars in Canada.

On May 27, 2019, British Columbia began switching patients currently taking biologics to biosimilars. This new measure, which concerns three biologics (Enbrel, Remicade and Lantus) has had and will continue to have repercussions on private drug insurance plans. We covered the impact of this measure in our June and November bulletins.

In December, Alberta followed suit with its own switch initiative. In addition to the drugs covered under British Columbia’s program, Alberta’s program includes the switch to the biosimilar version of Neupogen, Neulasta and Copaxone starting July 1, 2020, for all patients using those drugs and covered by the public plan. To date, insurers have not taken a position on this matter. We’re keeping a close eye on the matter.

Meanwhile, Quebec has taken a step back on the road to biosimilars: in February 2019, the Quebec Court of Appeal cancelled the Health Minister’s decision to remove Remicade from the list of drugs covered by the Régie de l’assurance maladie du Québec (RAMQ). The financial impact of Remicade’s return to the RAMQ’s list is relatively weak, as the reimbursement is based on the lowest cost generic equivalent (Renflexis). Nevertheless, Remicade’s return is an obstacle to the use of biosimilars in Quebec.

Despite this, British Columbia’s and Alberta’s initiatives are paving the way for similar programs promoting the use of biosimilars across Canada.

2. 2019 federal budget nudges Canada towards national pharmacare

In 2018, following the creation of the Advisory Council on the Implementation of National Pharmacare, many were expecting the federal budget of March 2019 to include concrete measures, especially since the Council issued an interim report on March 6, 2019, that laid the foundation for such measures.

In its budget, the government of Canada took its first steps towards national pharmacare by announcing two initiatives:

  • The creation of a Canadian drug agency responsible for assessing the cost effectiveness of drugs, negotiating pricing and procurement, and, ultimately, recommending drugs to be covered by the national plan.
  • The implementation of a multi-pronged national strategy to improve access to high-cost drugs used in the treatment of rare diseases.

By all appearances, these two measures bring Canada one step closer to the implementation of national pharmacare.

3. The Hoskins reports makes a strong case for national pharmacare

The creation of the Advisory Council on the Implementation of National Pharmacare led us to write our White Paper in November 2018. It details our analysis based on four guiding principles: access, cost stability, public-private mix and efficiency.

The Advisory Council delivered its final report, the Hoskins report, on June 12, 2019. Several of the report’s 60 recommendations support the two initiatives announced by the federal government in its 2019 budget, directly addressing the principles of access and efficiency described in our White Paper.

However, the Council recommends a universal plan that would fully reimburse prescription drugs with a copayment of $2 to $5 per prescription, up to a yearly maximum of $100 per household. This measure sets aside the public-private mix and raises serious concerns regarding efficiency and cost stability. Many other questions, such as the universal plan’s funding, remain unanswered. Read our June 2019 bulletin to learn more.

4. Reform of patented drug pricing regulations

In August 2019, the Patented Medicine Prices Review Board (PMPRB) issued its draft guidelines for the reform of patented drug pricing regulations. The key changes announced are as follows:

1. Updated list of reference countries for comparing prices

  • In Canada, drug prices are currently determined by evaluating the cost of the same medication in seven industrialized countries. The draft guidelines remove the U.S. and Switzerland as reference countries—two countries where drug prices are quite high—and include six new countries where prices are generally lower.

2. Access to rebates granted by pharmaceutical companies when determining drug prices

3. Consideration of pharmacoeconomic factors when setting drug prices

  • Drug prices may be adjusted downwards based on criteria related to the therapeutic value and sales volume of drug products.

These new measures are meant to reduce the price of prescription drugs in Canada. The government of Canada estimates that these changes could lead to savings of $13 billion over the next decade. However, these measures may have consequences for Canadians if pharmaceutical companies can’t find common ground. For example, the introduction of newer drugs may be delayed, or patient support programs may be revoked.

This reform has spurred interest and heated debates among all involved parties. We’ll be keeping track of any developments in the coming months.

5. Pharmacogenetics gain traction in Canada's private plans

Pharmacogenetics is the study of individual responses to drugs based on DNA. Pharmacogenetic testing can increase adherence to treatment, thus avoiding the waste of prescription drugs. Pharmacogenetics can help guide drug therapy decisions based on an individual’s genetic makeup, therefore bypassing the trial-and-error process when several drug therapies are available for a medical condition. In the long run, pharmacogenetics could even contribute to lowering the duration of disabilities.

Several insurers in Canada now offer the possibility of reimbursing pharmacogenetic tests, but this offer is not uniform: while some insurers reimburse the costs of tests only within the context of disability management for psychological disorders (for employees only), others reimburse the costs for all members (employees and dependents alike) through complementary health insurance.

6. British Columbia modifies its public health insurance plan

2019 was the second year of funding reform for the Medical Services Plan (MSP), British Columbia’s public health insurance plan. In its spring 2019 budget, the BC government confirmed that MSP premiums would be eliminated as of January 1, 2020. To compensate, employers have been paying a health tax since January 1, 2019. Read our bulletin to learn more about this new employer health tax.

In that same budget, the provincial government announced changes to Fair PharmaCare, British Columbia’s public drug insurance plan. The following changes were applied:

1. Lower deductibles

  • Since 2019, households earning up to $45,000 a year benefit from annual savings of $300 to $600.

2. Improved drug coverage

  • The province is investing to improve coverage for drugs to treat hypertension, diabetes, asthma and eye disease.
7. Ontario tightens coverage rules for OHIP+

In January 2018, the Ontario government introduced OHIP+, a free universal drug program providing coverage to all Ontarians under the age of 25.

Since April 1, 2019, all Ontario residents aged 25 and under who are eligible for a private drug insurance program must once again be covered by their private plan. This reversal by the new Ontario government means that coverage is extended only to Ontarians under the age of 25 who do not have access to private insurance.

Read our January 15, 2019 bulletin for more information.

8. New source of transfer for private plans

The use of specialty drugs to treat complex diseases such as rheumatoid arthritis or orphan diseases is becoming increasingly important among Canadians. This upward trend represents a real risk for public and private drug insurance plans. Additionally, certain drugs used to treat cancer or rare diseases are administered in hospitals and their costs are covered by public plans. These expenses are putting pressure on hospitals, which are looking for ways to pass the bill onto private plans.

As the majority of drugs under development are specialty drugs, we can expect costs to increase in the coming years.

9. Private insurers take action against the harmful effects of opioid use

In recent years, we’ve seen a surge in overdoses and deaths related to opioid use. Numerous factors have contributed to this crisis, including:

  1. The introduction of illegal synthetic opioids, such as fentanyl
  2. The overprescription of legal opioids like morphine or oxycodone

In response to this growing public health problem, measures have been taken by the various governments. Many Canadian insurers have followed suit, implementing measures ranging from prior authorization to imposing reimbursement levels, all to inform and protect private plan participants.

10. Bill 31 grants greater powers to Quebec pharmacists

Bill 31, under review since Fall 2019 by the Quebec National Assembly, falls along the same lines as a similar law tabled in 2015 and grants new powers to pharmacists. Pharmacists can now prescribe and administer vaccines and, in emergency situations, some medications, adjust or extend prescriptions, and substitute prescribed drugs.

Services rendered by pharmacists are covered by the Public Prescription Drug Insurance Plan (PPDIP). However, the Association québécoise des pharmaciens propriétaires (AQPP) believes these should be covered under the RAMQ. Such a change would allow individuals who do not have access to a private plan to benefit from pharmaceutical services free of charge and would no longer have to be covered by private plans.

While works surronding Bill 31 has fairly progressed, the reimbursement method for these services is still under review.

Throughout 2020, our specialists will be keeping a close eye on the initiatives and events described in this bulletin.

Have any questions? Email us!