The high cost of drugs: take the strain off company plans

Data is key to creating mechanisms that will reduce drug benefit costs. PHOTO: Adobe Stock

Keeping a tight grip on costs is more important than ever. One cost centre that can be better managed is the employee health benefit plan.

According to a 2015 Glassdoor survey, three in five employees value their company-sponsored health plans more than any other benefit and Harvard Business Review reported 88% of employees ranked health insurance at the top.

Manufacturing offers some of the best benefit packages. It’s partly due to higher rates of collective bargaining, but also the level of education and experience necessary for many of the jobs, as well as hazardous work conditions in some facilities that command stronger benefits packages to attract workers.

The challenge is that Canada has the third highest drug prices among all OECD (Organisation for Economic Co-operation and Development) countries and drug costs are growing faster than any other component of healthcare, second only to hospitals.

According to the 2017 Drug Trend Report from Express Scripts Canada, high-cost specialty medications, which make up 2% of total claims but account for more than 31% of total drug spending, increased by 6.5% in 2017.

More widely prescribed non-specialty drugs have also risen in price, raising drug costs across the board.

Balancing patient care and benefit affordability is top-of-mind for plan sponsors. So, what can employers do to sustain and improve their health benefit plans, in the face of rising drug costs?

First, understand plan members’ health challenges. The 2018 Sanofi Canada Healthcare Survey found 59% of drug-plan members report they have a chronic disease or condition, yet plan sponsors estimated that number to be only 29%.

That huge gap in awareness means companies aren’t targeting the heaviest users of the plan. That’s where the biggest cost savings can be found. In fact, according to the 2017 Drug Trend Report, just 20% of employees claim almost 80% of prescription drug costs from their employer plans. Their average annual drug spending is 15 times that of other claimants and they average 7.8 chronic conditions, 3.3 physicians and 8.9 medications.

Understandably they struggle with the complexity of their treatments. Targeting these patients can ensure better health outcomes and have a dramatic effect on the bottom line, but it’s a complex task that involves analyzing data for trends, looking at a person’s prescription history, supporting patients with information and digital tools to ensure adherence, and ultimately, suggesting lower cost alternatives.

Lower costs

A comprehensively managed plan lowers costs and creates healthier outcomes using four main levers:

Formulary management. It opens access to superior medications while targeting high-cost therapies that offer no added clinical benefit.

Utilization management. Tools such as prior authorization and step therapy programs are examples of intelligent plan design that guide patients to safer, more effective drug choices using clinically based criteria. Plus, patients are increasingly willing to receive personalized health information. In the Sanofi survey, 66% of plan members said they would consent to receive information on personal health issues based on their use of benefits.

Channel management. Leveraging a specific network of preferred pharmacies saves money by simplifying payment and adherence. Research shows patients who fill medications through a preferred provider are 15% to 25% more adherent compared to those who fill their prescriptions through other providers. Non-adherence is another way health costs rise, as patients experience increased disability, additional drug therapy and out-of-pocket and plan spending. The increase in absenteeism and loss of productivity all take a toll on the bottom line.

Health management. Patients with complex conditions such as cancer and cardiovascular disease need specialized care with better monitoring and supervision. According to the Sanofi survey, 84% of those with chronic diseases would like to know more about their condition and how to treat it, and 75% are interested in coaching from a pharmacist as a plan benefit. Pairing specialized pharmacies with enhanced digital health tools and better communication with patients offers a more holistic approach that better manages treatment complexity.

Manufacturers are always facing rising costs. Managing them is a challenge.

Applying tighter controls to employee benefits saves your company 10% to 15% just from drug expenditure costs.

Stéphanie Myner-Nham is the director of human resources and corporate services with Express Scripts Canada, a provider of health benefits management services. Visit www.express-script.ca.

This article appeared in the November-December 2018 print issue of PLANT.