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February 21, 2017


This evening’s moderator was Arvind Mani, Managing Director at MORSE Consulting Inc. The expert panel included Johnny Ma, co-founder of Mapol Inc. who spoke about the importance of private payers in Canada and how this sector is evolving and Jean-Michel Lavoie AVP, Product Development, Group Benefit at Sun Life Financial who gave his point of view from the insurer’s perspective. Approximately 150 people were in attendance

Arvind was the first speaker of the evening to address this very interesting and complex topic...

Canada’s private payer system covers over half of the country’s population on Rx drug expenditures

Total spend = $29, 4 Billion

  • Public payers : $12,5
  • Private payers: $10,4
  • Out of pocket: $6,5

Arvind presented a broad overview of the various pathways and objectives of each stakeholder in terms of Public Reimbursement:

What are they looking for?

  1. Health Canada: Efficacy and safety of the drug
  2. PMPRB: Determines if drug price is excessive by comparing it to other countries. Over the last few years, PMPRB has become less relevant due to the increasing importance of the pCPA
  3. HTA bodies : Comparative effects between the evaluated drug and others currently on market
    • INESSS( Oncology and non-oncology drugs- Québec )
    • CADTH/PCODR( Oncology drugs- Rest of Canada)
    • CADTH /CDR: ( non –Oncology drugs- Rest of Canada)
  4. pCPA: What is the value of this drug
    • Determines the confidential price which can be different from the original list price
  5. Public payers: Can we afford it

Johnny Ma, explained some of the current changes seen in the private payer landscape. The 3 big insurance companies, Manulife, Great-West Life and Sun Life account for 55% of the market, 25% are regional insurers and the remainder are Blue Cross insurers available in each province. The 80/20 rule in terms of open/managed plans has been used quite often over the past few years, however, more recently the percentage of managed plans is growing as a result of increasing costs.

Market access is defined by 2 main things:

  1. Coverage: What is reimbursed or covered on the drug plan
  2. Reimbursement: How much is covered and in what circumstances

4 main categories exist in private plan management:

  • Managed plan: this type of plan accounts for 25% of subscribers
    • o Tier 1/Tier 2: the difference between these two Tiers is the percentage of co-pay that will be paid by the client
  • Public Mimic Plan: 15% of drug plan subscribers are under this type of coverage which allows only what is covered on the public formulary
  • Open plan: Everything is covered on this plan, only 10% of private insurers will benefit from this coverage
  • Open plan with prior authorization: this type of plan is becoming very popular amongst employers and employees, 50% are adopting it

The new changes in the landscape include delays in drug plan decisions and listings. A number of plans are coming out with restrictions; while others are implementing a defined and fixed amount of what they will pay per employee instead of listing what is covered on their drug plan. A generational shift is also being seen as to how the value of drug benefit plans are viewed compared to their previous baby-boomers generation; millennials are requesting benefits on their actual needs and not on a basis of prevention for future needs. Preferred Provider Networks are also being adopted by the insurers with the sole purpose of reducing costs attributable to a reduction in distribution channel. Employees are also seeing step therapy policies being part of their drug plan; lower cost therapies are used first before moving to a more expensive drug.

Jean-Michel, talked about numerous specialty drugs being made available to patients and thus dramatically increasing the claims by segment. The split between specialty drugs and conventional drugs represents around 2% of the claimants, although, the percentage in dollars spent has increased from 17% in 2011 to 30% in 2016. Financial forecasting and modeling are done by looking at manufacturers’ pipelines to see what’s coming and try to collect data to establish future cost and premiums. From the employers’ perspective observing this trend they question being able to afford future benefit plans and asking their insurers to make sure that the costs are controlled. It’s becoming quite problematic to keep the rates affordable in the short and long term and making sure that the employees have access to the latest new drugs and technology. For these reasons, private insurers are starting to look at public formularies

Panel Discussion

Developing the right drug plan is becoming a balancing act since employers require cost containment but at the same time want to keep their employees happy with their drug plan. How are employees reacting with this changing environment?

Jean-Michel Lavoie & Johnny Ma: Many employees were used to the opened plan which reimbursed up to 80% of all drugs, nowadays , they are confronted with higher premiums and because of this, many will be more receptive to having pre-authorization or stricter reimbursement to decrease the cost of premiums. Another key element of making employees accept their drug plan changes is to make sure that employers effectively communicate the rationale of all changes to the drug plan.

What would be the private insurers preferred ways to contain cost; co-pays Tier 1 &2, pre-authorization, mandatory substitution etc.?

Johnny Ma: Everyone understands that pre-authorization is a good thing. The step therapy is something that will become more prevalent within the next 5 years.

Jean-Michel Lavoie: Insurance companies are now suggesting their clients run an expense model which will show where employers are getting the most of their money, subsequently, decisions will be made as to what kind of changes have to be made in order to implement a sustainable drug plan.


Jo-Ann Charland
Training Consultant and Medical Writer
Cell: 438-998-0498


Wednesday, March 17, 2021

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