Sustaining benefit plans

For a business to stay profitable and thrive, its main ingredient is an engaged and talented workforce. Compared to 20 years ago, the cost of remaining competitive and holding onto a talented pool of professionals is only increasing.

But employer-sponsored group benefits plans are facing greater strain as Canadians work longer — meaning they may be exposed to more health issues — and younger generations seek flexible and increased health coverage.

Prescription drug plans are the most highly valued benefit, more so than an increase in salary. Most Canadians prefer their benefits to $20,000 in cash, according to the 2011 Sanofi Canada Healthcare Survey of 1,598 primary holders of group health benefit plans.

However, employers are increasingly looking at ways to control costs when it comes to employee drug plans, and some are looking at solutions that pass rising costs along to employees.

“Employers are feeling financially strapped, and for good reason,” says John Herbert, director of strategy, product development and clinical services at Express Scripts Canada (ESC) in Mississauga, Ont., a provider of health benefits management services.

“Employee benefit plans are part of the Canadian working landscape. To stay competitive, companies need to manage their operating costs, and also recognize the value of benefits coverage in keeping their talent satisfied, so that they can be productive and healthy on the job.”

Offering the right benefits that employees value translates into a workforce that misses less work, is more inclined to stay with the company longer, and has a higher commitment to delivering on their company’s goals, says Priscilla Po, ESC’s senior manager of clinical services and drug plan management.

The realities of the drug plan landscape

Canadian employers spend more on prescription drug coverage than any other benefit, and that’s not changing anytime soon, according to the 2015 study Reforming Private Drug Coverage in Canada: Inefficient Drug Benefit Design and the Barriers to Change in Unionized Settings from researchers at Carleton University in Ottawa, the University of Victoria and the Université de Montréal.

Drug spending by the private sector doubled from $8.8 billion in 2003 to $17.6 billion in 2015, according to the Canadian Institute for Health Information (CIHI).

Not surprisingly, 70 per cent of employers were concerned about the sustainability of their drug plan, according to a 2014 Sanofi study involving 1,502 primary holders of group health benefit plans.

“Spending on high-cost drugs (those used to treat complex, chronic conditions such as hepatitis C and cancer) has grown from 13 per cent of total drug spending in 2007 to 30 per cent in 2016,” says Herbert.

“Employees are consuming a large portion of their total prescription drug spending on high-cost specialty medications, and employers are feeling the pinch because specialty drug spending is on track to reach 40 per cent of total drug spending by 2022, threatening overall employee plan sustainability.”

And 59 per cent of employees require medication for one or more chronic conditions, such as high blood pressure (21 per cent), mental illness (19 per cent) and arthritis (17 per cent), according to a 2016 Sanofi Canada Healthcare Survey involving 1,500 primary holders of group health benefit plans.

It’s not surprising the aging workforce does require more care.

Further, 14 per cent of plan members account for 72 per cent of total plan spending, according to the 2016 ESC Drug Trend Report.

Innovative solutions are required to help these members make better decisions to manage their overall cost and overall health.

Cost-containment measures

The good news for employers is there are ways to protect the employee drug benefit that both foster sustainability and are advantageous to employee health and productivity.

“With the economic challenges that companies face, you can basically strip it down to the basics of patient engagement and influencing better decisions to drive lower costs and healthier outcomes,” says Herbert.

There are many factors at play that threaten the sustainability of the drug benefit. And despite an aging workforce, increase in chronic diseases, and the high cost of drugs, the real issue is that up to one out of every three benefit plan dollars spent on maintenance medications does not necessarily improve employee health outcomes, according to research by ESC through retrospective analysis of claims.

While this finding may be shocking, it is advantageous because this high cost can be recaptured through employee engagement. In fact, optimizing spending on traditional maintenance drugs through pharmacy services that involve proactive discussions to influence better patient decisions can help fund access to new high-cost drugs, says Herbert.

Analysis of claims data has shown that informed plan members make the choice not to use costly medications, and ask for the more affordable alternatives. They also take their medications as prescribed, which leads to better health and eliminates the need for more expensive treatments. In the end, they pay less.

“Both employers and employees want great care at the best value, but navigating the complex world of pharmaceuticals without proper support is impeding plan members from making the right decisions,” says Po.

Benefits claims research, behavioural science and clinical expertise can be used to identify trends, develop comprehensive plan management solutions for targeted intervention, and provide support at key decision points along the treatment journey.

Employers may see between 10 to 15 per cent cost savings in drug expenditures when they take advantage of more comprehensively managed plan controls.

“Analyzing the data history for millions of Canadians and taking that data into account leads to more informed decisions, better health outcomes as well as a reduction in plan spending,” says Herbert.

Plan management solutions

After measuring the financial metrics of many employer-sponsored benefit plans, ESC has determined traditional approaches to plan management don’t work.

“Having given up, this is when we see employers implementing spending caps that simply transfer costs to employees, and this can lead to terrible consequences, where employees don’t take their medications because they can no longer afford them,” says Herbert.

Proven alternatives are available, but employers need to take the necessary steps to introduce comprehensively managed plans that align drug use with clinical guidelines.

Working with a company to empower employees to make more informed decisions, leverage clinical expertise and data analytics and guide them by providing solutions to achieve better health outcomes will help.

It can reduce costs and minimize spending for employees and will contribute to cost savings for employers.

“This approach allows employers to save money on the drug benefit, while attracting the talent that will allow them to grow and be successful,” says Herbert.

Informed plan members avoid using costly medications, and ask for more affordable alternatives.

Anthea Gomez is director of HR and corporate services at Express Scripts Canada in Mississauga, Ont., provider of health benefits management services. For more information, visit www.express-scripts.ca.