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August 15, 2012
“Waste” costs drug plans billions, report says

Private drug plans waste between $12 billion to $14 billion per year in prescription drug claims according to the Express Scripts Canada 2011 Drug Trend Report.

Defining the term “waste” as “spending more without improving health outcomes,” the pharmacy benefit management firm says that poor drug dispensing and plan management practices account for up to $5 billion in waste each year.   Another $7 billion to $9 billion is wasted by non-adherence to prescription instructions by plan members.

“Express Scripts Canada believes that in 2011 alone, private plans in Canada wasted more than $5 billion in drug spending.  In addition, another $7 billion to $9 billion was wasted due to non-adherence,” the organization says in its 2011 report.

The primary cause of waste at the dispensing and plan management levels occurs when drugs are not dispensed for the optimal period.  For example, maintenance drugs used to treat chronic conditions such as diabetes or high cholesterol are often dispensed with an average supply limit of 46 days.  The optimal supply limit for such medications is 90 days. 

“The waste created by refilling a prescription more frequently than necessary can be easily addressed – and avoided – thereby saving plan sponsors and plan members significant amounts of money,” the report says. 

As well, excessive dispensing fees charged by some pharmacies also undermine drug plan funding, Express Scripts warns.

“Express Scripts Canada research has determined that 22 per cent of all pharmacies across Canada charge a dispensing fee of $11.99 or more and 30 per cent of all prescriptions paid by private drug plans are dispensed from these pharmacies.  By encouraging patients to obtain their drugs from a pharmacy that charges a lower dispensing fee, this channel waste can be eliminated,” the report notes.

(In Ontario, Coughlin & Associates Ltd. operates a preferred provider network of more than 500 pharmacies that agree to limit their dispensing fees to the Ontario Drug Benefit (ODB) plan maximum of $8.40 in most areas, saving plan members as much as $3.59 or more per prescription.)

The combination of using pharmacies offering lower dispensing fees and encouraging a 90-day supply protocol can generate substantial savings for plan members and plan sponsors, the pharmacy benefit management firm asserts.

As well, it says, using generic substitution, where pharmacists are encouraged to seek approval to substitute lower cost generic drugs over more expensive brand name medications, or a managed drug formulary, can also reduce unnecessary spending.

“With multiple patent expiries and drug-price reforms introduced by most provinces that have further lowered the prices for generic drugs, it is quite obvious that plan sponsors can benefit financially by simply mandating generic substitution,” the Express Scripts 2011 report says.  “The substitution of clinically equivalent and/or therapeutically equivalent drugs for more expensive brand-name drugs will result in significant cost savings for the plan sponsor and the patient.”

The organization goes on to suggest that for every one per cent increase in the generic fill rate, a decrease of approximately one per cent can be realized in a plan sponsor’s overall drug spending costs. 

Controlling the members’ non-adherence to drug prescriptions is a bigger challenge, Express Scripts Canada concedes.

Not taking medications as prescribed can lead to worsening patient health, repeat visits to physicians, extra laboratory costs, additional drug therapy, and more emergency room visits, the organization warns. 

“In most cases, poor adherence is simply the result of poor behaviour (ie. forgetfulness and procrastination to obtain refills at the retail pharmacy).  Non-adherence waste can be reduced by simply helping patients to understand the importance of adherence and empowering them to stay compliant with the medication regime prescribed to them,” the report says.  “Such behaviour changes can save billions of dollars per year in related health care costs.”

Ironically, when it comes to prescription adherence, both plan sponsors and plan members have the same goals:  lower costs and optimal health.

“The disparity is not between the goals of plan sponsors and patients; rather, it is between what consumers want and what they do,” Express Scripts Canada says.

The report goes on to suggest that traditional tools such as member education or financial incentives to encourage proper adherence to prescriptions may not work.  To activate the good intentions that already exist, more advanced application of behavioural sciences and more interaction between plan members and trained professionals involved in members’ drug maintenance regimes should be considered, the report notes. 

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