Prescription medications are typically seen as a must-have for benefits plans. But it is important for organizations of all sizes to align their philosophy, capacity for increased premiums, and employee needs where possible.
We wanted to provide some fresh insights into the shifting Canadian drug landscape.
Key drug cost drivers include utilization, drug inflation, specialty drugs, as well as fraud, waste, and abuse.
Aging Population: Canada’s aging population means that more people are taking more drugs. There are two factors that contribute here: first, elderly use more drugs because illness becomes more common. Second, it’s common for older people to have multiple conditions with one or more medications prescribed to treat each condition. Common ailments include arthritis, gastrointestinal disorders, cardiovascular disease, depression, and diabetes.
There is more awareness of medical issues, and earlier diagnosis means earlier access to treatment.
Drug Inflation: Primary care physicians are diagnosing and treating an increasing number of patients for diabetes (growing at 5% per year) and asthma (growing at 4% per year). Unfortunately, generic substitutes do not exist today for these types of medications. Combined with new more expensive treatments and manufacturers’ annual drug price increases, inflation is an ongoing reality for drugs in the future.
Specialty Drugs: These are drugs which cost more than $10,000 annually per patient. Biologic drugs are a type of specialty drug made from living organisms or cells (animal, bacteria and yeast). Not all biologics cost more than $10,000 annually. Nationally, specialty drug fill rates have increased from 0.5% in 2014 to0 .8% in 2018.
Fraud, Waste, and Abuse: The presence of organized crime in the benefits plan space has gained attention from many insurance carriers motivated to reduce their exposure. Intentional or unintentional waste and overconsumption is also driving up drug costs.
Let us know if you have any questions about how your plan could include an integrated approach to drug cost sustainability.
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