The rising cost of prescription drugs is the single greatest challenge to the sustainability of most traditional benefit plans. This trend continues to escalate beyond all other Canadian healthcare expenses. In fact, Canada pays more for prescription drugs than almost every other country in the world, and is the only country that has universal health care costs but not universal drug coverage. With necessary prescriptions beyond the financial reach of many Canadians, one in ten patients has stopped taking a vital medication, according to a study in the Canadian Medical Association Journal.
In many cases, improving medical technology and the development of more sophisticated treatment drugs have led to dramatic improvements in the available treatments for many health conditions. Yet these solutions are often only available outside of the public healthcare system and their price tag can be simply unaffordable.
It’s understandable for companies facing expensive, uncovered pharmaceutical needs to wonder how their benefit plans can afford to cover recurring, catastrophic health claims. The result, employers fear, could be increasing premiums to the point where they are forced to exclude or cap benefits, or even terminate drug coverage entirely.
Employers wishing to provide good medical coverage for their staff are truly stymied by these developments – and are desperately searching for a good solution. However, due to laws concerning privacy, employment standards and human rights, the employer’s hands are often tied. Costs are driven entirely by the medical needs of the organization’s staff and their families, as well as by the evolving pharmaceutical industry itself, making it difficult for employers to avoid this challenge.
In fact, plan sponsors need to accept the increasing probability that an employee or their eligible dependents will require expensive prescriptions that could significantly improve their quality of life. Yet covering this expense could literally make your benefits plan unsustainable when it comes time for future renewals.
Insurers have attempted to respond to this concern with the Extended Healthcare Policy Protection Plan (EP3), an industry-led pooling of high recurring prescription drug claims based on market share. Unfortunately, some specialty drugs have come to market at prices well above the limits of this program, and, as a further complication, many benefit plans don’t qualify for inclusion. This leaves Stop Loss insurance as the employer’s primary line of defense in mitigating such risks. Stop Loss insurance is used to cap the exposure faced by the sponsor to a specified dollar amount, and fortunately, is commonly embedded within a company’s regular healthcare premium.
Companies should work with a dedicated and competent benefits advisor to help navigate these treacherous waters. There is no doubt that employers will find themselves increasingly challenged in meeting their staff’s healthcare expectations as more expensive treatments continue to enter the market each year. Speak with your advisor and take the time to learn more about EP3, your Stop Loss provisions and any drug management tools that might help you in implementing your company’s plan.
This article originally appeared in CapriCMW Risk & Business Magazine.
Steve Hesketh brings 30 years of benefits consulting experience. Prior to joining CapriCMW in 2001, he represented group insurers in southern Ontario and Vancouver. He currently is the Managing Partner of the Benefits Division of CapriCMW in Kelowna. Contact Steve at 250 869 3827 or firstname.lastname@example.org.