Influencing the future of private drug plans

Patients are pharmacies’ biggest ally in the increasingly complex world of private drug plans, stressed Jeff May during the Canadian Foundation for Pharmacy’s (CFP’s) Pharmacy Forum webinar, “Decoding the Insurance Industry” in June.

Jeff May

“It’s really important for the pharmacy to be able to help patients be their advocate,” said May, a pharmacist and founder of Northern Sky Healthcare Consulting, with more than 20 years of experience working with stakeholders in the private health-benefits sector.

He said pharmacy is already playing an important role helping plan members navigate their coverage. When patients have concerns, that role can include “helping the employee, the plan member, ask good questions of their union or their benefits [provider]…to say, ‘This aspect of plan design doesn’t really meet my health needs,’ or ‘It doesn’t respect what I need as an individual,’” explained May.

This is also the time for pharmacists and pharmacies to support the advocacy efforts of their provincial and national pharmacy associations, and keep informed of the regulatory environment. “Pharmacy and the industry have really awakened around the need to engage and have discussions and debates around the important things that are happening now,” said May, citing the Competition Bureau’s recent announcement to investigate Express Scripts Canada, a pharmacy benefits management (PBM) firm, following a complaint of anti-competitive practices filed by the Canadian Pharmacists Association.

May also noted that much debate on the regulation of pharmacy preferred provider networks (PPNs) is currently happening in Ontario, where the Ministry of Finance is holding its second round of consultations on potential policy options.

Two sides of a story

While the negative impacts of PPNs and other actions by the insurance sector are real in pharmacy, May emphasized the importance of understanding the challenges faced by the other side.

The main player is the plan sponsor, or employer who pays for the health benefits plan, he said. “Typically in Canada, companies spend between $3,000 and $5,000 per employee per year on health benefits, and this cost is typically around 15% of the annual payroll,” said May. “It’s a significant investment from a plan sponsor.”

Prescription drugs account for the biggest share of spending, noted May. Industry reports also estimate that drug expenditures by private drug plans will increase by an average of 7.5% annually for the foreseeable future due to growing utilization as well as high-cost specialty drugs, he added.

Plan sponsors’ investment in employee health constantly bumps up against affordability, exacerbated by factors outside of their control, such as inflation and an increasingly uncertain economy. “This is a very uncertain phase…the need for plan sponsors to manage costs and manage risk exposure is going to create more conversations about more aggressive controls in benefits plans,” said May.

When it comes to the pharmacy provider agreement between the pharmacy and the PBM or third-party administrator, “typically they’re quite one-sided. They exist to protect and manage the costs and risks of the insurance product,” said May. “Pharmacy operators and owners need to understand [their] rights within these agreements so that [they’re] not operating outside the agreement. Because operating in the gray can cost you, as a pharmacy business owner, a fair bit of money.”

Again, May encouraged pharmacy operators to interact more with both pharmacy advocacy associations and patients to influence the future management of private drug plans.

“The most important message from a pharmacy and pharmacist perspective is to be close to your patients. Live up to your care promise. Provide the best service that you can to your patients…help them to be advocates for great care under their benefits plan. At the end of the day, that’s the most important thing we can do to contribute to the best health outcomes and, ultimately, cost management within the [insurance] industry,” said May.

When asked if pharmacy benefits management in Canada could follow in the footsteps of what’s happening in the U.S., May agreed that the situation south of the border—where “pharmacy deserts” have emerged in recent years due to the high pace of closures—is a “cautionary tale.” However, patient choice has so far differentiated and protected Canada.

“Canadians value and want choice of their healthcare provider. That has always been the case,” said May. “That’s embedded in how we think in Canada, and will influence plan sponsors and the insurance industry…to respect that as a Canadian value.”