Insurers need to look more at chronic conditions to limit plan costs

New report shows that 4% of plan members account for 72% of total plan spending

Insurers need to look more at chronic conditions to limit plan costs
Escalating drug costs are an ongoing concern for Canadians, especially when you consider the demographic shift currently underway as society ages. It’s a major cost for individuals, but also employers and governments. According to the Pharmacare 2020 report, public drug plans account for 42% of all prescription drug costs in Canada, private plans cover 36%, while those not covered by either a public or private plan account for 22% of drug costs.
It means rising drug costs affect everyone, but there are ways to alleviate the cost burden for all those concerned. The recently released Express Scripts Canada Drug Trend Report has revealed certain areas where efficiencies could be made.
In particular, the findings showed that:
  • Spending on high-cost drugs (those used to treat complex, chronic conditions such as hepatitis C and cancer) has grown from 13% of total drug spending in 2007 to 30% in 2016.
  • 14% of plan members account for 72% of total plan spending.
  • One out of every five dollars spent on prescription drugs in 2016 paid for medication for diabetes or an inflammatory condition.
  • There was double-digit growth in spending on cancer and attention deficit hyperactivity disorder medications during 2016.
  • Cancer treatments dominate the drug development pipeline and a continued shift from hospital-administered drugs (covered by public plans) to self- administered drugs is expected to mean more private-sector claims and higher costs in the future.
Addressing the study, John Herbert, Director of Strategy, Product Development & Clinical Services at Express Scripts Canada, identified some of the key reasons drug costs were spiralling in this country.
“A big portion of that is the introduction of new high cost drugs in Canada and the increased prevalence of some drugs that were previously not treatable with medication,” he says. “There are more medications that are being expanded in their use to treat a broader part of the Canadian population.”
When it comes to the cost of medication, the United States is the world’s most expensive country by far. Canada, despite having a good reputation internationally when it comes to its healthcare system, does not rate so highly when it comes to drug affordability.
“We do have some controls in Canada,” says Herbert. “The introductory price of medications is controlled by the Patent Medicine Review Board, which keeps it in line with other industrialized nations.”
The disparity in drug costs here and a nation like New Zealand where it is a fraction of the price comes through speciality medications. In Herbert’s view, some of these drugs are being used by an increasing number of people, and need to be classified differently when it comes to their cost.
“We are beginning to see some of those high cost speciality medications being priced as if they were an orphan drug treating a very small proportion of the population,” he says. “Some of those conditions have what we call orphan-drug pricing, a high price tag, but they treat thousands of Canadians. So we see an imbalance between the cost of a medication and the people it is treating.”
With a small proportion (14%) of plan members accounting for a large amount (72%) of total plan spending, the insurance industry needs to give more focus to managing these claimants’ care. Often, these people typically suffer from six or seven different conditions at once, meaning they could be using eight or nine different medications simultaneously. It’s hard to keep track of, so there needs to be more help offered, believes Herbert.
“They struggle with knowing which medications are the most cost effective and clinically effective for their care,” he says. “So there is a huge opportunity for plans to really focus on driving better decisions and empowering those members with more information so they can make a better, more informed decision.”

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