Canadian HR Reporter

CANADIAN HR REPORTER June 13, 2016 6 NEWS Getting a handle on rising drug plan costs Roundtable looks at options for employers, including evidence-based drug plans, financial disincentives and pharmacy networks BY LIZ BERNIER THERE'S no question the cost of drug plans is increasing consider- ably, if not accelerating — espe- cially when it comes to specialty medications. So, how can employers slow down the spend increases while still offering competitive benefits packages? A recent roundtable in Toronto, moderated by Sarah Dobson, edi- tor/supervisor at Canadian HR Reporter, and sponsored by Sun Life Financial, delved into this and other questions. What's behind the increases? There are a number of factors behind the growing drug costs, said Atul Goela, director of phar- maceutical benefits at Sun Life Financial in Toronto. "ere's been tremendous in- novation that's been occurring from a drug plan (perspective). If you look at what drugs and types of drugs are coming out to the marketplace, we're in a stage of rapid evolution in the technology that goes into bringing drugs to market," he said. "As a result, the drugs that are coming to market are that much more powerful or effective. We talked about, five or 10 years ago, having targeted medication. We're also in that area where it is very targeted, precise. If you look at cholesterol, as an example, there used to be hundreds of thousands of people who were eligible for treatment. "Now, we're getting very spe- cific treatments when it comes to their genetic makeup." It's about targeting at a level where, even in a large population, there are only sub-sets of the pop- ulation that would benefit from the products. at's the level and the precision available in medica- tion as a result of the innovation that's happening in both medicine and technology, said Goela. "And we're in this tremendous upswing of that technology that it's almost sometimes difficult to see... e example I give is the cell- phone. You look at five years ago what a cellphone could do versus today and what a cellphone can do. e same kind of evolution is happening on the drug side." Diseases that used to be death sentences have become chronic diseases, whether it's HIV or can- cer, said Tim Clarke, chief innova- tion officer, health and benefits, at Aon Hewitt in Toronto. "That's phenomenal from a drug treatment perspective. It's had an unanticipated effect on those who are paying for the pro- grams in that now you're treating something for many years as a chronic disease in a very expen- sive manner in some cases and differently than you would have in the past," he said. "at's created a timeline of how long someone will be on a very expensive therapy that's dif- ferent now than it was 10 years ago. It really flows through into something like large-amount pooling, which has become a huge challenge for many orga- nizations, whether you're talk- ing about the insurance industry or about employers. You're now funding treatment for chronic diseases that can be upwards of $30,000 or $50,000 or $500,000 a year." ere's a whole new world of funding chronic diseases, said Clarke. "at's not what stop-loss in- surance was built for. You're trying to solve today's problems with an old solution, and everyone's feel- ing the tension from that." Usage in general has also gone up as a result of the aging popula- tion, said Goela. "We have an older population, not only aging in itself and the disease that comes with it, but they're also using more medica- tions. Where in the past it might have been just diabetes, now it's diabetes, high blood pressure and cholesterol. So, right there, we're treating three diseases, once again, in a population that's also aging. So more people, more drugs, more diseases." Practical solutions? Evidence-based drug plans and formularies could be one solution, said Goela — although there's no silver bullet. "It's all incremental and addi- tive solutions, so evidence-based and looking at the evidence. We talked about the 'Who's the right person for the right drug at the right time?' concept. So, are you taking the drug where it will actu- ally have clinical values and effec- tiveness?" he said. "It's looking at things like man- datory generics. e prices have come down to where they are 18 to 20 per cent of the brand. e evidence suggests they are effec- tively equal. Promoting these ge- nerics... it's all additive solutions that come to help manage the overall cost." Legislation has certainly im- proved the use of generic drugs, said Alan Kyte, senior pharmacy consultant at Willis Towers Wat- son in Toronto. "Government intervention has reduced the price of generic drugs considerably... a generic drug was maybe 70 per cent of the cost of a brand not so many years ago, maybe 10 years. Now it's 20 per cent the cost of a brand. So there's an 80 per cent savings there," he said. "Government has certainly stepped forward not only to en- courage the use of generics but also reduce the price through different reforms across the prov- ince. I think that's definitely been a significant help." ere's also the option of using financial disincentives such as co- pay or co-insurance, so employees share some of the cost, said Kyte. "I'm a big believer in sharing some cost with employees... I have seen far too often when it is 100 per cent covered, there is a com- plete disregard for need versus want. You go to the physician and you get a year's worth of prescrip- tion, some of which you may or may not need through the year." You want people to be thinking as if it's their own money for those day-to-day expenses, said Clarke. "At the same time, you want to make sure someone has the pro- tection if something really cata- strophic happens." For Thomson Reuters, it's been about moving to generics, moving to formularies and prior authorization, said Barb Con- way, vice-president of human resources and customer experi- ence at omson Reuters Legal Canada in Toronto. It's also interesting paramedical costs are increasing, she said. "We're trying to balance that with 'How is that then pushing down some of our drug costs?' and really trying to analyze that and get our arms around that. We're definitely seeing that trend." Using pharmacy networks is another option, said Jonathan Fournier, health and benefits con- sultant at Mercer in Montreal — but a potentially tricky one. "To have success with a phar- macy network is a combination of plan design modification because you need to create an incentive to all employees to go to a pharmacy included your network," he said. And Canadian employers tend to resist retail pharmacy net- works, said Kyte. "One of the main reasons is we're so geographically expan- sive that getting a network that will cover everybody's locale is very difficult. ere are very few groups of drug stores that cover, and you end up cobbling together different pharmacies." Subsequent entry biologics (SEBs) are another newer option that sounds promising — but how much might they actually save employers? "It's still early days. It doesn't fall into the same pricing realm as it stands today. We're seeing prices come 16 to 50 per cent lower for the few SEBs that have come to market," said Goela. ere are a couple of different issues with SEBs, said Clarke. "One is: Are physicians going to start prescribing the SEBs? We've seen that with the couple that are on the market now, that there's virtually no usage of them. Without the ability to do a gener- ic-type substitution, what is the take-up of SEBs going to be?" he said. Kyte was a bit more optimistic. "I'm speaking as a clinician. I firmly believe that (with) SEBs, there is definitely a hope for sav- ings there. Health Canada has not become comfortable with the lev- el of interchangeability between the SEBs and the regular drugs. I think, as time goes on, that level of comfort will rise as well," he said. "e ability to interchange them at different levels may also help for savings opportunities. But it is early days." Employee considerations Employers are increasingly look- ing at what the right amount of SPONSORED BY COVERAGE > pg. 7 "It's all incremental and additive solutions, so evidence-based... It's about 'Who's the right person for the right drug at the right time?'"

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