Canadian group insurers face rising drug-price pressure

by Leo Almazora14 May 2019

Canada’s top group insurance providers are increasingly concerned as the impact of drug prices is increasingly felt by organizations, according to a new report.

“The emergence of high-cost specialty medications has caused organizations to carefully consider strategies for alleviating the cost impact, while at the same time maintaining high quality coverage for their employees,” said benefits-service firm Accompass in its 2019 Guide to Insurer Health Trends report.

Surveying 10 of Canada’s top group insurers including Desjardins, Equitable Life, and Great-West Life, Accompass found that the top drugs claimed in group plans on a cost basis were Remicade, Humira, and Stelara. Representing annual costs that can run into the tens of thousands of dollars for each patient, Remicade and Humira are used to treat conditions including rheumatoid arthritis, psoriatic arthritis, plaque psoriasis, and Crohn’s disease.

To assist private drug-plan sponsors, Accompass said six out of 10 carriers have negotiated special pricing for certain drugs. “In addition to negotiated pricing, every major group insurance carrier in Canada now offers additional review and oversight for new medications approved by Health Canada and existing medications for new indications,” the report said, explaining that reviews are conducted before a drug is approved for coverage.

Insurers also conduct prior authorization checks before covering certain prescribed medications. Based on research over the past two years, Accompass estimated that 98%-99% of employers with a drug plan use it to ensure that they help employees using the most effective treatments.

“In addition to prior authorization, every major group insurance carrier in Canada offers case management on certain drugs as a measure to help the employee, their physician, and their pharmacist ensure proper treatment and adherence to the medication as prescribed,” the report added.

Another important measure in containing company drug-plan costs has been to favour coverage of lower-cost generic drugs. Accompass estimated that some two thirds of companies in Canada have mandatory generic drugs, noting that Health Canada approves generics based on their “being pharmaceutically equivalent to the corresponding brand name drug.”

But the story is not as straightforward when it comes to high-cost biologics, some of which have less expensive biologic equivalents. The report observed that Health Canada does not recognize biosimilars as a generic equivalent to the original reference drug, adding that the medical community has not embraced the nascent drug class.

“In an effort to help gain cost efficiencies, insurers have reached consensus that biosimilars should be dispensed ahead of the innovator biologic for new starts,” Accompass said.