There are several new drugs for cancer and rare diseases coming into the marketplace that fall into the “extremely expensive” category. That is because the pharma pricing model is imperfect and drug prices are difficult to control let alone predict both here and in the US.
The reality is that drug plans were not designed for million dollar claims. A few years ago, a “high claim” was maybe $10K a year. Now, lots of drugs cost more than $100K a year. It is great from a health standpoint that there are so many innovative products and treatment options available on the market today but we have to find a balance between the benefits of the drugs and the pricing sustainability of the drug plan. After all, pharmaceutical benefits are becoming the major cost driver of employee benefit plans.
Consider that a drug plan could be hit by a single claimant for a single drug for $1 million a year. So Insurance Carriers are putting mechanisms in place to help plan sponsors invest their money wisely and establish good governance of their drug plans.
For example, most insurance providers are committed to mandatory generic substitution, prior authorization, preferred pharmacy networks, negotiations with manufacturers and integration of claims with provincial drug programs.
Recent drugs approved by Health Canada and ones currently under review come with a hefty price tag; so how will these drugs be integrated into group benefit plans, do they requires prior authorization and what clinic criteria will be considered etc?
As the health care budgets shrink and the cost of new medications and therapies increases, there’s a growing need to assess whether the efficacy of a new drug is worth its incremental cost. A multifaceted assessment must be used to gauge the cost of the treatment relative to its consequences, overall effectiveness and the patient’s quality of life, the reality is that sometimes the new drugs are not any more effective than those already available.
Source: newsletter issued by SunLife May 1, 2016 (summary) written by Jean-Michel Lavoie B.Pharm., MBA and Atul Goela B.Sc. Phm, R.Ph