Product Modernization

The view from warp speed...

Brad Fedorchuk, VP, Group Marketing

Ah, the group benefits industry. Sometimes when the issues are piling up, when the questions are pouring in, exceptions need to be handled, and with today’s reality of constantly being busy, it feels like the world and our industry are moving at warp speed. 

Of course, the reality is things also move slowly enough that it’s hard to understand how we can’t keep up. Whether the pace for you right now is fast or slow, there are three major trends that need to be considered in plan design:

Generics

It seems like forever ago that the Competition Bureau published a report suggesting that generic drugs were over priced because the market wasn’t competitive. Provincial drug reforms have been going on ever since with reactions from all sides. Many generic drugs are now priced at between 18 and 35% of their brand name counterparts.  Brand name manufacturers have combated with ‘coupon cards’ that will pay the cost differential between the brand and generic version. A policy in the case of generic drugs has always been a good idea but today it’s not something a sponsor should ignore. Without a policy sponsors are incurring between 4 and 6% more on their drug spend. All provincial government programs use generics first. Opinion is split as to whether a generic policy is modern or not, it’s fair to say that a plan absent of a policy is living in an outdated environment.

Specialty Drugs

There’s no standard on these drugs, but they share some common characteristics:

• They’re often the last therapy option. Other treatments have failed, and these drugs often represent the last hope for a patient who is very sick.
• Often very, very expensive – $30K or more a year is common and costs can reach to upwards of $600K - and these are chronic conditions, meaning the expense is ongoing.
• Provincial coverage is partial at best. A longer discussion for another time, but this is an area where it seems some still believe someone else will cover it. 

Use of these drugs has increased over the past several years and is growing faster than other areas. With that in mind, no sponsor should be without a policy on these drugs. 

Many group plans don't include consideration
of health and wellness policies

Do you want your plan to provide the best coverage for minor ailments, or for protection from chronic disease that could financially ruin someone, or much worse, force someone to go untreated? 

Regarding employee health, there’s a decision to be made. Many employers have workplace health and safety policies but many recently-implemented group plans do not include consideration of health and wellness policies. 

More resources are available from insurers and other sources than ever before - the opportunities to review and modernize have never been better. 

In terms of plan you should consider:

• How a policy on generic drugs can positively impact a plan.
• Specialty drugs are expensive but insurable. Do you want the best coverage for cough syrups or for cancer treatments?
• If you could prevent just one employee’s diabetes from progressing further would you take action?

These questions reinforce the need to set clean policies and luckily, there are many resources available to help answer them.

Do you want to have claims managed without seeing if the treatment is working or being complied with? At $30K a year, that is a lot of expense to go unchecked. Patients have a responsibility to use their medications properly. These, and other questions, are central to developing a clear policy on high cost medication.

Seize the opportunity to achieve modern plan management

Health strategies

Many medications help people stay healthy. Some, but not all diseases are either preventable or manageable so a serious health condition is prevented. What about screening to detect pre-diabetes, hypertension, or high cholesterol? These aren’t easy processes to implement but can help with improving plan member health, rather than relying on medications only. What about follow-up? After medication is prescribed who’s ensuring the patient is taking them correctly? Does the patient need help, or maybe a different medication that’s easier to take?

These three trends present a lot to think about but solutions are available that are easy to incorporate. Seize the opportunities to achieve modern plan management.

Brand Name Drugs vs Generic

Brand Name or Generic

When a new drug is developed, like many products, it’s patented by the manufacturer, granting exclusive rights to market it for a specific time period. In Canada, this time period is typically 20 years from the date of patent filing. In these 20 years, other drug manufacturers cannot market a generic copy of the brand name drug. As soon as the patent expires however, other drug companies can sell generic equivalents, and do, most often at a lower price. In fact, in Canada, the average price for a brand name drug in 2011 was $72. The average price for a generic drug was $34.

What’s the difference?

Generic medications are closely reviewed by Health Canada and must pass a series of tests before the drug can enter the marketplace. In order for a drug to qualify as a generic equivalent, it must have the identical medicinal or active ingredient as its brand name counterpart, and be demonstrated to be as safe and effective as the brand name drug - so, the same thing, in a different package.

  

The impact on plan costs

Will plan sponsors see a drop in their drug claim costs if plan members start using less expensive, generic drugs? Yes, depending on plan member education and benefit plan design.

Plan design and plan member education

A key component to realizing savings from patent expiration involves designing a benefits plan that promotes the logic of using generic equivalent drugs where available. Keep in mind that when a patent expires on a brand name drug, some plan members still choose to use it, rather than a lower priced generic equivalent medication.

Based on our claims data, when a plan’s design encourages the use of generic medications, the plan experiences cost savings without comprising coverage. This approach balances the health needs of plan members and the cost needs of plan sponsors.

Talk to your Great-West representative for more information or visit us online here.