The Canadian Life and Health Insurance Association (CLHIA) has launched an agreement to collectively protect fully insured private drug plans from the full financial impact of high cost drugs.
Prescription drug coverage in Canada is currently a mix of public and private accountability. In the absence of progress on a catastrophic drug program in Canada, insurers are banding together in order to share the costs of highly expensive and recurring drug treatments through an industry drug pooling framework, said CLHIA.
Twenty-four insurance companies across Canada, that collectively represent 100 per cent of the supplementary drug market, have committed to joining this pooling framework.
Going forward, participating insurers will set premiums for fully insured employer drug plans without including any pooled high cost drug claims.
"The ability for insurance companies to pool the costs of very expensive drugs represents a win-win scenario for all participants in fully insured plans," said Frank Swedlove, president of CLHIA. "Employers get a more financially sustainable drug plan, employees benefit as they will continue to receive coverage from their employer plans even in the face of a high cost drug claim, and insurers are able to spread the cost of high cost claims amongst the participating companies."
One-third of small and medium-sized employers would consider making changes to their drug plans if premiums were to jump in price by 25 per cent, according to a poll by CLHIA.
This agreement will effectively shelter Canadians from potentially losing their employer-sponsored drug coverage due to a high cost claim — something that was increasingly a risk for those employed by small and medium sized businesses.
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