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News



July 03, 2013
Private drug plans “not sustainable,” Great-West Life executive says

Private drug plans are “not sustainable” in their current form, a Great-West Life executive told an Ottawa conference on universal pharmacare this past May.

In a blunt assessment of current group drug plan arrangements, Great-West Life Benefits Solutions Practice Leader Barbara Martinez told conference delegates that the high cost of new biologic drugs will force drug plans to radically alter their plan design and administration practices.

According to Ms. Martinez, the costs of routine maintenance drugs to control common medical conditions such as high blood pressure have increased by 58 per cent from 2005.  While the cost of these maintenance medications has jumped to an average of $525 per year, those charges are dwarfed by the expenses associated with new biologic and specialty drugs.

“The average annual cost of those drugs per person is $15,000 a year compared to $525 per year for maintenance drugs,” she said.  “A single prescription costs more than $2,200 on average.  Costs for those drugs have increased by 325 per cent since 2005.”

The Great-West Life executive went on to assert that “most drug plans as they exist are not sustainable.”

While drug plans are considered insurance, the reality is that plan sponsors, not insurance companies, are paying individual drug benefits, she said.

“The truth is, your employer is really just paying your benefits,” Ms. Martinez said.  “If costs escalate, the burden falls on employers, not insurance companies, which simply increase premiums to cover higher costs.”

However, she cautioned, increasing premiums or altering co-payment arrangements will not be enough to meet the impact of rising drug costs.

To address these concerns, Ms. Martinez proposed the adoption of formal case management systems to monitor and control the use of expensive medications by benefit plan members. Great-West Life has already introduced such a system for drug plans that it underwrites.

Under Great-West’s arrangement, a case manager is assigned to monitor an individual’s use of
high cost biologic medications and his/her physician’s prescribing of the drug. The manager may also direct a plan member to the specific pharmacy where he/she may obtain a prescribed drug.  (Prescription fees and ingredient cost mark-ups can vary widely by pharmacy.  A case manager may require that a medication be purchased only at the most competitive pharmacy location.)

“I don’t think employers want to stop paying for drugs or take access away,” Ms. Martinez said.  “We just need to find better ways to manage these costs.”

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