Stormy Times: Batten Down Your Benefit Plan to Navigate Massive Change

Feb 09, 2017

We flandscape-1640881_640irst began talking about the wave of new specialty drugs back in 2014. That wasn’t very long ago, but in today’s era of lightning-fast change, those are like prehistoric times. In the previous decade, the consuming talk was of the patent cliff and the reduced drug cost inflation that came with it. Weren’t those the days? Well, we survived the Lipitor and the Crestor era only to enter a more frightening time – the era of specialty drugs.

In 2014 we were warned of this new class of drugs, developed to fight terrible diseases with unpronounceable names. In 2015, I wrote about some of these specialty drugs, not necessarily biologic and not entirely chemical, that were designed to treat many more common chronic illnesses such as MS, Hepatitis C, high cholesterol and rheumatoid arthritis. Even cancer, in its many forms and one of the most dominate conditions today, is now being treated as a chronic disease. Clearly, there have been some dramatic discoveries in treatment and in medications that can save lives. But they come at great cost. 

After all, there is a common thread in each of these therapies and medicines, biologic or not. They are all very expensive. And now that they are here and are being used to treat relatively common chronic conditions, claims costs under traditional private health plans, are once again entering a period of high inflation. The challenge now is how to pay for these new treatments which can result in years of treatment instead of months.

Given all this, you would assume plan sponsors had already started making significant changes in their plans to counter balance the risks in this new drug trend. Surprisingly, that is not the case according to Barbara Martinez, Practice Leader Drug Benefits Solutions at Great-West Life. Early in 2015, Martinez told us that over 90% of Great-West’s clients had not even ‘touched’ the design of their drug plans in over a decade. Prehistoric times indeed.

This is especially interesting when you consider that in a Benefits Canada 2015 survey over the preceding five years, more than half of the responding plan sponsors were concerned or very concerned about the rising costs of drugs. So what’s holding plan sponsors back? 

It’s a challenging question to answer. But in my own experience, plan sponsors, and particularly plan members, aren’t likely to embrace some of the levers we typically use to control costs, such as benefit caps, increased co-pay, and restricted formularies. And, as we all know, we Canadians don’t like our health care meddled with. Equally, decision makers for many plan sponsors generally feel the same way. Fear of change, combined with a lot of misinformation, can create inertia. 

Although all this may be true, there is another reason why plan sponsors are not acting on the message. Some people involved in the design and administration of drug plans, and the stop-loss insurance designed to protect plan sponsors, don’t quite understand all of the options, the need for risk management, or the implications of the needed changes. There has never been a time when advice was more important than it is right now. The days of simply seeking the best price from competing health insurance providers on a static, never-to-change plan design is over. Actually, that paradigm ended some time ago. Unfortunately, some have yet to notice.

The practice of providing advice to plan sponsors has entered a new world and it is incumbent on advisors and everyone in the service chain to seek to do better. Plan sponsors want sustainable benefit plans because there is a genuine concern for the well-being of their people and they want those benefits to fit into the organization’s overall business strategy and values.

The solutions don’t always have to be negative. Nor do they always result in taking away benefits or valuable health coverage from plan members. For example, we have learned along the way that a simple but key element in a sustainable health plan is a well-designed health and wellness program built to the specifics of your organization’s biometrics and for your employees’ state of health. Moreover, the data coming out of both your plan and wellness initiatives can now be easily analyzed to create a targeted and customized drug formulary. This approach addresses some of the problems in traditional plan design such as adherence and efficacy. With continued monitoring you will have the beginnings of a customizable and sustainable benefits plan that will show positive outcomes in your workplace. Using these kinds of strategies in designing your benefit plan can have a beneficial and enduring impact on the internal inflation rate of your organization’s benefits and compensation costs.   

You can fight against the inertia we sometimes suffer from, but it isn’t easy. Change can be frightening. Fortunately, evolution has a way of forcing us to adapt one way or another. All stakeholders in this eco-system will have to acclimate to survive the change in the weather.

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