New coalition will help organizations manage drug plans

Co-operative model aimed at decreasing employers' $14-billion drug tab
|hrreporter.com|Last Updated: 05/27/2010

A new co-operative alliance among Canadian plan sponsors aims to help employers better manage employee drug plans.

Membership in the Canadian Rx Coalition will give organizations control over their pharmacy benefit plans, and ensure long-term sustainability in the face of rising costs, according to consulting firm Towers Watson.

"The majority of working Canadians and their families depend on corporately-sponsored health benefits to ensure affordability of the prescription drugs they need," said Wendy Poirier, director of the Canadian health and group benefits practice at Towers Watson.

"The new Canadian Rx Coalition will enable participating organizations to better manage their drug plans, to the benefit of both employers and their employees."

Prescription drug costs have more than doubled over the past decade. At the same time, drug expenditure per capita has soared, with Canada now ranking second in the world after the United States according to the Canadian Institute for Health Information.

Total drug spend in Canada is now more than $30 billion, of which approximately $25.4 billion (84 per cent) is for prescription drugs. For employers, this translates into a $14-billion drug tab.

Unfortunately, many of the drivers of increasing costs have been "invisible" to employers. Pharmacy rebates — the method by which drug pricing agreements are established — and other aspects of drug pricing are not transparent, make it extremely difficult for employers to effectively manage their drug benefit programs.

At the same time, Canadian drug plan sponsors often encounter design and administrative challenges, including vague descriptions of what is covered for employees, inconsistent adjudication, lack of incentives and processes to improve generic dispensing rates and inefficient prescription re-supply practices.

Members of the Canadian Rx Coalition will have access to better ways to proactively manage pharmacy costs and deliver optimal care, including collaborative purchasing and much improved transparency of the deal terms available to them through their pharmacy benefits manager.

The coalition will provide significant immediate and long-term value through:

• transparency in drug pricing, vendor contracting and reporting

• efficiency and immediate cost savings through improved management, reduced or eliminated administrative error and more effective co-ordination

• new delivery models such as preferred providers and carved-out drug plan options

• design support for active pharmacy benefit and clinical management

• improved therapeutic results and value to patients through managed programs and formularies

• collaborative bargaining to gain a stronger position and industry voice

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