Aspects of New Wonder Drugs From Both Sides of the Benefit Plan

Aug 28, 2017

pills-1885550_1280If you’re one of the one in four people with liver failure or cancer caused by Hepatitis C, the good news is there’s now a miracle drug for that. The bad news is it’ll cost you nearly the price of a small condo in some parts of Canada. But if you’re fortunate and have a good employee benefits plan it’s time to breathe a sigh of relief, right? Not so fast. Even a small copayment on some of these miracle drugs might have you lying awake at night. So listen up and get ready because these drugs are the big chatter around the group benefits water cooler these days.

So called miracle drugs are also called wonder drugs and for good reason. They produce dramatic responses in previously incurable diseases. Take Hepatitis C for instance. Some of the biggest drug research labs have recently released cures for this chronic liver disease. This is undeniably good news.

But let’s unpack some of the details about these new drugs and their costs to see how it affects your bottom line whether you’re paying all the bills or you’re an administrator for a group benefits plan. Each of these drugs is a once daily 12 week regime and Health Canada has already approved two of them, Harvoni and Sovaldi. They ring in with list prices of $69,000 and $110,000 respectively. The latest drug approved by Health Canada is Epclusa with a slightly lower list price of $60,000. These are massive numbers.

So who pays? Here’s where the issue gets muddy. And the answer is: It depends. It depends on where you live in Canada. Some provinces have been quick to step up to the plate to cover costs along with other miracle drugs while others just take their time. It also depends on whether your employer offers a group benefit or not and what their coverage is.

Here’s one scenario: You’re a plan member receiving treatment and your plan covers 80% of prescription drug costs. This sounds like good coverage and it is. However, when we are talking about a treatment costing $70,000, it still leaves you with a whopping bill of about $13,800. That is over $1,100 extra dollars going out the door each month.

Now flip the picture on its head and look at the effects if you are the plan administrator for your benefits plan. With 80% co-insurance, you are now between the proverbial rock and a hard place. On one hand, you are pleased with your ability to help your employee’s get well, however you may also be wondering what those large claims costs will do to the ever increasing pooling charges at renewal. The question then becomes how to reconcile these two issues.

As we mentioned earlier, some provinces have made the choice that a cure, with a hefty, but fixed up front price tag, is better than undefined ongoing treatment costs. For this reason, some argue the rest of the provinces need to follow suit. Others call for pharmaceutical companies to reduce the price tag. Moreover, what about the  group benefits plan administrator? Fortunately, they have had some degree of protection against the high cost of specialty drugs since 2013. That was the first year of a drug pooling agreement that spreads the high cost of these drugs and treatments among all insurance carriers. However, there is some evidence it is not working. We are already experiencing some insurers refusing to bid on some plans due to the presence of recurring high-cost drug claims and we do not yet know how the insurance industry or government respond. Time will tell. However, one thing we do know is there will be more miracle drugs and they will bring both good news and bad news.

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