FROM THE TEAM
Losing Sight of the Big Picture?
The increase in demand for pharmaceutical products and the steady increase in the average cost of a prescription in Canada over the past decade have left plan sponsors in a difficult position. The need for better management of the drug benefit has become especially apparent to those companies with an aging workforce, operating in competitive industries. This won’t be news for most readers, which is why I find some plan sponsors’ behaviour difficult to understand at times.
In order to keep an active pharmacy license in Ontario, we are required to complete a minimum of 200 hours per year in the pharmacy. This is a requirement we enjoy since it keeps us in touch with the issues surrounding drug plans at the grassroots level. I recently spent time in a pharmacy where I can conservatively estimate that Cubic Health could save one particular plan sponsor in the local area $10,000 or more annually for every shift I spend in that one pharmacy.
This group’s drug plan has very few restrictions, and every hour I would come across opportunities for drug plan optimization that would save the company a great deal of money without compromising patient care. This group, for a number of reasons, is unable and/or unwilling to look at ways to effectively manage plan costs despite its massive spending on prescription drugs. With these kinds of dollars on the line, and the obvious opportunity for cost containment, I’m at a loss for understanding that mentality. How many other lines on the P&L Statement offer that kind of opportunity for increased efficiency?
Can you imagine what kind of flexibility a company, even one with a strong union presence, could have if they paid more attention to where the major hemorrhaging of money was happening? If your drug plan costs have gone up 10% over last year, do you feel that your employees are on average 10% healthier? Are you getting 10% more value out of what you are spending?
Personally, I’d like to see the hundreds of thousands of dollars a year that could be saved in this one group be distributed in the following way: a percentage to the unions and employees to be used at their discretion (perhaps as a bonus) as a thank you for being a partner in rational cost containment, an equal percentage to the employer as a reward for having the ability to see the big picture, and possibly an equal percentage again to a reserve fund to cover catastrophic drugs for employees, spouses or dependents requiring expensive treatments for devastating disease states or to cover excluded items in special cases for those who really need them.
In our eyes, that’s the goal of drug plan management: a win-win for all stakeholders, including plan sponsors, plan members, physicians (whose lives are made easier when a patient has coverage for needed medications), pharmacists, insurance carriers, adjudicators, and pharmaceutical manufacturers. That happens when the proper steps are taken towards the long-term sustainability of the plan as a whole, and every other plan member isn’t taking the most expensive therapy on the market for treating a straightforward disease state like high blood pressure, where the drug options are limitless.
To pass along any comments on Cubic Health Monthly, or to see back issues of our publication, please visit our website at http://www.cubichealth.ca.
Sincerely,
Mike Sullivan
President
| LATEST NEWS |
Prescribing Rights for Pharmacists
– What Does It Mean for Drug Plans?
The recently announced changes to the Alberta Pharmacy Act have generated a great deal of public interest and, in some cases, concern. The controversy comes from the changes in the laws allowing pharmacists to have “prescribing rights”. The response from patient advocacy groups have largely been critical of this change suggesting that pharmacists don’t have the skill set to prescribe appropriately, or are biased towards prescribing for financial gain.1 However, much of the concern seems to stem from a belief that these legislative changes will mean that pharmacists have the same authority as doctors to prescribe, which will not be the case.
Click here to read more...
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| DRUG & DISEASE NEWS |
Health Canada Approves Cervical Cancer Vaccine
Health Canada has approved a new vaccine indicated to prevent cervical cancer. Gardasil® (quadrivalent human papilloma virus (Types 6, 11, 16, 18) recombinant vaccine), developed by Merck, received its Notice of Compliance from Health Canada on July 10, 2006 and will be made available in Canada by the end of August. The Food and Drug Administration (FDA) in the United States approved the drug in June as well. It costs $360US for a course of three treatments. Canadian pricing has yet to be published.
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NOC Watch:
Orencia® (abatacept)
Generic Risperidone
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| FOR THE PLAN SPONSOR |
The Impact of New Medications on Drug Plan Costs
One of the most intriguing statistics related to drug plan management in recent years came out in 2004 Drug Trends compiled by pharmacy benefits manager (PBM), ESI Canada. Based on their book of business of tens of millions of drug claims, they concluded that new drugs released onto the market in 2004 had an average ingredient cost of $142.50 per prescription. This figure was almost three times higher than the average of $50.62 for all drugs claimed in 2004.
Click here to read more...
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Plan Sponsors with No Current Concerns with Drug Plan Costs
– What Now? (Part 1)
Some groups have been fortunate to avoid large increases in drug plan costs during their most recent benefits year. Other groups have yet to see extensive spending in their drug plan due to a younger average age of plan members, and/or a healthy plan member population free of the impact of age-related chronic illnesses. What these groups share in common is a lack of concern about current trends in their drug plan spending. As a result, there appears to be little need in this group for drug plan management.
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July 2006
Issue No. 14 |
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QUICK FACTS
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A leading US wireless communications provider made changes to their prescription drug plan design in attempt to alter participant purchasing behavior and contain costs:
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Group 1 (new design):
Generic Drugs - 20% co-pay
Brand, Formulary - 30% co-pay
Brand, Non-Formulary - 40% co-pay
Group 2:
Generic Drugs - $6 co-pay
Brand Drugs - $14 co-pay |
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Here were the results:
Cost PMPM, 2004, Group 1: $29.64 (-8.9%)
Cost PMPM, 2004, Group 2: $37.00 (+7.0%)
Generic Dispensing Rate, 2004, Group 1: 53.6% (+4%)
Estimated savings to company, 2004, Group 1: $3,571,500
Estimated savings to company attributed to changed member behaviour, 2004: $2,821,500
Read more...
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