Panel discussion from the 20th Annual Market Access Summit.
As the COVID-19 pandemic continues to circle the globe, it’s altering how medications are prescribed and how new innovative therapies emerge, leading to big changes in the Canadian pharmaceutical market. In that context, now, more than ever, private plans need to be able to manage these changes while continuing to offer affordable, sustainable plans to their members.
At the 20th Annual Market Access Summit on October 5 to 6, 2021, market access and drug reimbursement stakeholders from across Canada gathered to discuss the rapidly evolving pharma marketplace. In one panel discussion, TELUS Health and Canada Life talked about pathways to access and reimbursement for private payers. TELUS Health focused on incorporating the private payer perspective in evaluating the cost-effectiveness of drugs, which entails detailed review processes so that its results provide relevant information to decision-makers, allowing them to make evidence-informed decisions for drug plan development. Canada Life, meanwhile, focused on current drug trends, an overview of the group insurance industry and the impact of COVID-19 on its clients’ drug plans.
The panelists for this webinar were:
- Daria O’Reilly, PhD, Lead Health Economist, Pharmacy Consulting, TELUS Health
- Barb Martinez, National Practice Leader, Drug Solutions at Canada Life
Current trends.
The onset of COVID-19 had a big impact on drug plans because it decreased overall utilization, said Martinez: “We saw fewer prescriptions for acute medications—antibiotics and pain medications.” At the same time, those plan members who did make a claim, claimed more frequently and also claimed higher-cost medications, resulting in a net increase in the amount covered per certificate in 2020.
Martinez said that diabetes is the number one category of drug spending for Canada Life drug plans, followed by biologic response modifiers, which treat autoimmune conditions such as Crohn’s or psoriatic arthritis.
According to the Canadian Life and Health Insurance Facts 2020 Edition:
- 26 million Canadians are covered by supplementary health plans, which account for $28 billion in spending.
- 12 million Canadians are covered under disability plans, with $8 billion in spending.
- 21 million Canadians are covered under accidental death and dismemberment policies, totalling $1.4 billion in spending.
“That’s a total of $38 billion in health benefits paid for by group insurance industry,” said Martinez, adding that specialty drugs accounted for about one-third of claims costs in 2019 and represented about 33% of total drug spending.
The Canadian Group Insurance Industry spent $12.5 billion on drugs drug payments in 2020, with $650 million on medications that treat rare diseases, according to Canadian Life and Health Insurance Industry Facts 2020 Edition.
The private payer.
Who ultimately ends up paying for drug costs? While insurers pay for medications through premiums, that money comes from employers or plan sponsors who purchase insurance products and pay the premiums, explains Dr. Daria O’Reilly, Lead Health Economist, Pharmacy Consulting, at TELUS Health. As a result, it’s up to them to balance a plan’s affordability and sustainability while helping to ensure their plan offerings are robust and attractive to employees.
“Employers want to provide a comprehensive plan, they want to help keep the workforce healthy and productive—reducing absenteeism and improving productivity—and also attract and retain employees, and provide competitive offerings,” she said.
O’Reilly says plan sponsors turn to insurers who sell them products, such as formulary designs (i.e. co-pays, caps, managed formularies, etc.). These plans can help manage their costs while still ensuring they can deliver a wide range of drugs and services.
While formularies are effective tools at managing benefits plan costs, the drugs listed need to ensure they provide value for money from a private payer perspective. They must be viewed on how they are valued by employers and employees—not merely how they will impact the public healthcare space. “How the drug plan impacts the performance and success of an organization needs to be considered, and I think that is key in differentiating it from a public payer perspective,” said O’Reilly.
As a result, TELUS Health has introduced an Enhanced Drug Review (EDR) program to help ensure plan sponsors get value for their drug plan spend for their employees. This program is like the Canadian Agency for Drugs and Technology in Health (CADTH) process in that newly approved drugs are evaluated by a committee of experts who conducts an objective review of the clinical evidence and safety, the estimated financial impact of introducing the new drug to the plan and a critical assessment of the cost-effectiveness of the new drug. A key feature of the TELUS EDR process is that the two economic components of the review use a private payer perspective. A cost-effectiveness analysis compares the incremental costs and benefits of at least two therapies. The goal is to determine whether a more expensive drug merits reimbursement relative to other drugs that are currently being reimbursed, based on the value or benefits they provide. “TELUS Health uses an enhanced drug review process to help ensure plan sponsors get value in their benefits plans,” said O’Reilly. The listing recommendations that result from these reviews are provided to TELUS Health’s carrier clients who subscribe to this process and are also used by TELUS Health to inform the TELUS Complete managed formulary.
The cost-effectiveness analysis factors in the difference of costs (drug acquisition costs as well as costs associated with using the drug) compared to the difference in effects (life years gained, quality-adjusted life years, etc.). This is called an Incremental Cost-Effectiveness Ratio (ICER) and the lower it is, the more cost-effective an intervention is considered to be.
Helping private payers manage drug costs.
In 2017, Canada Life launched the SMART (Sustainable, Managed and Reasonable Treatment) drug plan to review new high-cost drugs, factoring in their impact on drug plans and improving the value of their drug spend. According to Martinez, 95% of Canada Life clients have adopted SMART contract language. “It’s a really important tool in helping to keep plans affordable and sustainable,” she said.
Canada Life subscribes to the TELUS Health EDR process and the recommendations are used to inform their listing decisions. O’Reilly says it’s important to determine cost-effectiveness from a private payer perspective – a key differentiator from the CADTH process, which focuses on the perspective of the broader healthcare system. She says that at the end of TELUS’ review process, drugs are assigned to one of three categories: list, do not list, or list with conditions.
She said insurers are not required to follow TELUS’ drug listing recommendations. “They must consider their own healthcare priorities, their available resources and other previous formulary decisions, as well as the values of their beneficiaries,” she said. “This is just one piece of information that’s used to make formulary listing decisions within the private payerspace.”
O’Reilly said that the use of cost-effectiveness analyses in the private payer space is gaining in popularity: many of the larger insurers are becoming more sophisticated in using cost-effectiveness in formulary management, and well-versed in health technology assessment methodologies.
The future: More meaningful discussions around pricing.
According to O’Reilly, TELUS Health is always open to dialogue with manufacturers. She said that topics that are often discussed include: what is involved in the private payer perspective, what TELUS Health does with the economic models when it receives them, the types of information that is being used and how it’s used, the relationship between TELUS Health and its carrier clients, and listing decisions for TELUS-managed formularies.
She said that she hopes there will be more communication going forward: “I think having more of that back-and-forth dialogue will be helpful, because we will then receive submissions that are more relevant to the private payer’s needs.” She said more communication may lead to more of a private payer lens and perhaps an opportunity to discuss potential listing agreements.