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June 13, 2012
Insurers join drug pooling agreement

Almost two dozen of Canada’s largest insurers have agreed to pool their catastrophic drug claims.

In an effort to spread the cost of unusually large drug claims and still provide drug coverage to plan members, the insurers have agreed to share the cost of the drug claims that exceed $50,000 per claimant per year.

The new arrangement will go into effect on January 1, 2013.

The pooling arrangement will be applied only to fully insured drug plans. While it will not apply to self-insured arrangements, insurance industry representatives have not ruled out extending the plan to those groups in the future, the Canadian Life and Health Insurance Association (CLHIA) says.

Under the pooling arrangement, insurers will pool the costs of large drug claims and ignore the impact of those claims when setting premiums for plan sponsors. The initiative will reduce cost pressures for insurers and plan sponsors while increasing the potential for members’ drug plans to withstand large claims.

Canadian insurers paid out more than $9.5 billion in prescription drug claims in 2010, the CLHIA says. Claims with amounts exceeding the $25,000 level have been increasing at an annualized rate of 20 per cent, it warns. In 2010, approximately 1,900 drug claims from fully insured plans involved amounts of more than $25,000 each.

Cost pressures are expected to accelerate with continued development of expensive biologic drugs, some of which can cost several hundred thousand to $1 million per year, along with the expected increase in prescription drug usage from an aging population.

The following companies have joined the pooling arrangement:

Alberta Blue Cross;

Assomption Vie;

The Co-operators;

Desjardins Financial Security;

Empire Life;

Equitable Life;

GMS Group Medical Services;

Great-West Life;

Green Shield Canada;

Industrial Alliance;

La Capitale;

La Survivance;

Manitoba Blue Cross;

Manulife Financial;

Medavie Blue Cross;

Pacific Blue Cross;

RBC Insurance;

Saskatchewan Blue Cross;

SSQ Financial;

Standard Life;

Sun Life Financial;

Union Vie; and

Wawanesa Life.

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