Economist Don Drummond’s report, “Public Service for Ontarians: A Path to Sustainability and Excellence” contains suggestions of note for drug Plan Sponsors. Given that, according to the report, between 1975-2006, inflation-adjusted spending per capita on hospitals in Ontario rose 51 per cent, the cost of physician services rose 98 per cent and pharmaceutical costs went up 338 per cent, Drummond’s recommendation that private-sector employers should exercise greater control over the cost of their drug plans seems obvious. So the questions becomes, what can Plan Sponsors do to ensure sustainability of their program and how will employees react to the changes?
Cost Saving Measures
There are many cost sharing and cost savings measures available to Employers to help control rising drug costs and still provide effective therapeutic drug solutions. Capping dispensing fees, adopting generic substitution, and raising copayments are self-explanatory concepts. Introducing prior authorization, a requirement whereby a physician must obtain approval from the patient’s health plan where an employee is prescribed a high priced drug and a less expensive drug is available, is worth considering. A form must be submitted explaining the rationale for the higher cost drug in order for the plan to provide coverage. Maximum allowable pricing is another alternative that places a price ceiling on a specified class of drugs-that is, drugs that treat the same condition. Reimbursement is capped at the lowest-cost, most effective drug in the category. Some drug plans are evidence based, which means that higher priced drugs that do not show greater health outcomes for a condition are removed from plan coverage. All of these solutions still provide access to the most effective, yet lowest cost alternative drug therapy.
Manage the Change Through Effective Communication
So how can Plan Sponsors effectively communicate the need for potential drug plan changes to employees without creating an angry backlash? Be transparent. Explain the cost dilemma and the desire to continue valuable drug programs in a sustainable manner. Be clear on what the change entails and ensure plan members have easy access to information about the changes. Ensure resources are available to assist plan members affected by the changes.
The Drummond Report urges tough decisions today for a sustainable plan tomorrow. Wise words. Plan Sponsors are well advised to take note.