Highlights of the legislative and industry updates in 2011

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Federal and provincial legislation and budgets as well as changes to provincial health plans can have a considerable impact on group benefits plans. We communicate these changes to you via Focus Updates during the year.

The tables below provide a useful province by province recap of the changes we have seen in 2011. 

BRITISH COLUMBIA

British Columbia’s Generic Prescription Drug Program

In 2010, some provinces took action to reduce the price of generic drugs. In July 2010, B.C. announced that they had reached an agreement with the pharmacy association. The agreement limits generic pricing to:

  • 42% of brand for new generics and 50% for existing generics, made effective October 15, 2010;
  • 40% made effective July 4, 2011 (all generics);
  • 35% beginning on April 2, 2012 (all generics);

Our generic experience in B.C. shows some price decreases for generics on the Fair Pharmacare formulary - a net savings of about 10% in formulary-generic drug claim costs to date. (Formulary generics represent about 23% of all drugs claims paid in B.C.) An apparent concurrent increase in the average brand cost may mitigate expected savings.

For more information, refer to Focus Update #274 

BC’s Insurance Act amendments (Bill 6)

On December 1st, the Insurance Amendments Act, 2009 was proclaimed into force effective July 1, 2012, the same date as Alberta’s amendments. Regulations necessary to implement the legislative reforms will also come into force on July 1, 2012, the same date Alberta has chosen to implement similar statutory and regulatory programs. The intent of the delayed effective date is to give insurers and insurance agents time to adjust insurance contracts and processes to meet the new requirements. BC is also providing a further six month transitional period until January 1, 2013, to allow insurers to continue using existing license insurance classes for reporting and business authorization purposes.

Work to review the impact of these changes is underway. A communication with details regarding the changes, along with any impacts to contracts and processes will be communicated soon.

ALBERTA

Alberta’s Generic Prescription Drug Program

In 2010, some provinces took action to reduce the price of generic drugs. Alberta implemented a phased-in approach for some features of their generic drug reform. 

Effective April 1, 2010, the price for existing generic drugs listed on the provincial formulary reduced from 75% to 56%. The price for new generics was set at 45% of the brand drug.

As part of the reduced generic price change, Alberta implemented a Transitional Allowance to compensate pharmacies for revenue lost due to the new generic price policy. To be phased out over three years, the allowance is in addition to the pharmacy dispensing fee and applies to all prescriptions (brand and generic drugs) under $75.

The transitional fee of $3 was reduced to $2 effective April 1, 2011. Upcoming reductions are as follows: 

  • reduced to $1 beginning on April 1, 2012;
  • will be eliminated April 1, 2013.

While the legislation did not require private plans to pay the Transitional Allowance, we are o following the public plan and will pay this allowance to Alberta pharmacies.

Our drug price files were updated to reflect the reduced Transitional Allowance of $2, effective April 1, 2011.

For more information, refer to Focus Update #274

Alberta’s Insurance Act amendments (Bill 11)

On July 14 2011, the Alberta government proclaimed the Insurance Amendment Act, 2008 (Bill 11) will come into force on July 1, 2012.  The legislation updates the Uniform Life and the Uniform Accident and Sickness sections of the Insurance Act containing the rules for insurance contracts. Similar changes have been made to British Columbia’s insurance legislation. A number of regulations required to support the legislative reform will also come into effect on July 1, 2012. 

Work to review the impact of these changes in conjunction with those of BC is currently underway. A communication with details regarding the changes, along with any impact to contracts and processes, will be communicated soon.

SASKATHCHEWAN

Saskatchewan expanding their diabetes program

As of January 2012, the new Saskatchewan Insulin Pump Program will expand its coverage to include Type 1 diabetic adults 25 years of age and under.  Previously, only children under the age of 18 with Type 1 diabetes were eligible for coverage.

A communication will be provided in early 2012 as more details become available.  

ONTARIO

Ontario’s Generic Prescription Drug Program

In 2010, some provinces took action to reduce the price of generic drugs.  Ontario implemented a phased-in approach for some features of their generic drug reform.

Ontario’s legislation for reduced generic prices was effective July 1, 2010. For the Ontario Drug Benefit (ODB) Ontario’s public plan, the generic drug price reduced to 25% of the brand price as of that date. However, for private payers, the reduction in generic prices is phased in over three years:

  • 50% of brand put in place on July 1, 2010;
  • 35% put in place on April 1, 2011;
  • 25% beginning on April 1, 2012.

Professional allowances for the ODB were eliminated, effective July 1, 2010. For private payer plans, they started being eliminated on a phased basis: reduced to 50% July 1, 2010; 35% on April 1, 2011; 25% beginning on April 1, 2012 and to 0% on April 1, 2013.

We have updated our drug price files to reflect the reduction in generic prices to 35% of the drug brand price. The effective date of the price file change was extended to April 21, 2011, which allowed time for pharmacies to deplete existing inventory purchased at the higher price. This helped ensure that plan members were not negatively affected by pharmacies charging them the higher price for the generic drugs already in their inventory.

For more information, refer to Focus Update #274.  

New requirements under the Ontario Narcotics Safety and Awareness Act, 2010

During 2011, Ontario highlighted a need to educate health care professionals and the public on the proper prescribing and use of prescription narcotics.

Ontario’s Narcotics Strategy promoted the proper use of prescription narcotics and other controlled substance medications while they worked at reducing drug abuse and addiction. Additionally, the strategy ensured people who need narcotics and other controlled substances for appropriate medical use would continue to have access to these medications.

As a result, on November 1, 2011, the following requirements came into effect:

  • Ontarians must provide personal ID to their doctor, dentist and pharmacist in order to receive prescription narcotics and controlled substance medications.
  • Ontarians may also be required to present ID if they have been authorized to pick up prescription narcotics or other monitored medication for someone else.
  • Prescribers (e.g., doctors) and dispensers (e.g., pharmacists) must record the identifying number of the type of identification that is being used, as this information may be disclosed to the Ontario Minister of Health and Long-Term Care and/or the Executive Officer of Ontario Public Drug Programs.

For more information, refer to Focus Update #318.

Accessibility for Ontarians with Disabilities Act (AODA)

The Accessibility for Ontarians with Disabilities Act (“AODA”) was enacted in 2005, and aims to achieve a barrier-free province for persons with disabilities by improving the identification, removal and prevention of barriers. The law requires compliance in the areas of customer service, employment, transportation, and communications. Sun Life is committed to applying these standards not just in Ontario, but across Canada.

While the legislation has applied to the public sector since 2010, private sector organizations, such as Sun Life, are required to comply with implementation dates ranging from January 1, 2012 through to 2025.

As of January 1, 2012, Sun Life became compliant with the Customer Service Standard, which requires us to develop policies and practices relating to the delivery of goods and services to persons with disabilities, complemented by appropriate training. We also have implemented sections of the Integrated Standard related to emergency response procedures in time for the required January 1, 2012 deadline.

For more information, refer to Focus Update #320.

QUEBEC

New rule relating to minor beneficiary designations

A case decided by the Superior Court of Quebec has clarified the law on who can receive proceeds on behalf of a minor beneficiary named under a life insurance policy in Quebec.

Further to this ruling, in Quebec where the beneficiary of a life insurance policy is a minor at the time of an insured’s death, Sun Life will pay the proceeds to the parent(s) (or other legal guardian if applicable) and not anyone else who might be named as administrator/trustee of the proceeds.

For more information, refer to Focus Update #259

Quebec’s Generic Prescription Drug Program

In 2010, some provinces took action to reduce the price of generic drugs.  Quebec implemented a phased-in approach for some features of their generic drug reform. 

In November 2010, Quebec announced that the province would be reducing prices for generics on the provincial formulary to 25% of brand drugs using a phased approach over three years:

  • reduced to 37.5% of brand put in place on November 2010;
  • reduced to 30% put in place on April 2011;
  • reduced to 25% beginning on April 2012.

Quebec began phase two of their reductions in April 2011. We updated our price files to reflect the reduced prices.

For more information, refer to Focus Update #274

Changes to Sun Life’s reimbursement percentage on brand-name drugs for members in Quebec 

In Quebec, patented drugs are protected by RAMQ (the Public Prescription Drug Insurance Plan) for 15 years after the date they arrive on the RAMQ formulary. This means that generic options can be available on the market before the 15 year period has expired, but RAMQ and private plans are obligated to reimburse the brand-name if a plan member wants it.

Due to a number of brand-name drugs now coming off patent, we will be reducing the coinsurance payment to the RAMQ minimum of 68% on the affected drugs (for plans that contain the generic substitution option). Currently, there are approximately 50 drugs (130 Drug Identification Numbers (DINS)) that will be affected by this change.

If your plan contained the generic substitution option, this means that as of October 1, 2011, you should have seen savings in your drug costs because you are no longer obligated to pay the plan percentage for drug reimbursement (e.g. 80%). The reimbursement percentage level is now set at the RAMQ minimum of 68%.

For more information, refer to Focus Update #303.  

Quebec Sales Tax (QST) rate increase effective January 1, 2012

In its March 2010 budget, Quebec announced that an increase to the QST rate collected on goods and services will occur on January 1, 2012. The QST rate increased from 8.5% to 9.5%.

Therefore, services where the 5% GST as well as the 8.5% QST is currently applicable on our fees will now see the QST rate increase to 9.5%.

In September 2011, the Quebec and Federal government announced the harmonization of the Quebec Sales Tax (QST) with the GST in the “Memorandum of Agreement concerning a Canada – Quebec Comprehensive Integrated Tax Coordination Agreement”. The proposed implementation date is January 1, 2013. This change will impact how the QST and GST will be calculated on our services where these taxes currently apply on our fees.

It is expected that a formal agreement between Canada and Quebec will be entered into by April 1, 2012 at which point additional details of this new tax structure should become available. We will continue to monitor the development of this new tax structure in order to fully assess the impact these changes will have on our group benefit products and services.

For more information, refer to Focus Update #319.

Universal Insulin Pump Program for Children 

On April 16, 2011, the Minister for Health and Social Services announced a program for universal access to insulin pumps for children under the age of 18 with Type 1 diabetes.  Since it is a universal program, the Ministry has confirmed that the public plan will be first payor.

A communication will be provided in early 2012 as more details become available.    

NEW BRUNSWICK

New Brunswick announces Pediatric insulin Pump Program

In November 2011, New Brunswick announced a paediatric insulin pump program for children under the age of 18.  The program began accepting applicants in January 2012.  The public plan will be first payor.

A communication will be provided in early 2012 as more details become available.

FEDERAL

C-28 Fighting Internet & Wireless Spam Act

Bill C-28 is Canada's Anti-Spam Legislation.   According to Industry Canada, « the Bill is intended to deter the most damaging and deceptive forms of spam, such as identity theft, phishing and spyware, from occurring in Canada and to help drive spammers out of Canada ».

The Act will establish a regulatory framework to protect electronic commerce in Canada.   C-28 received Royal Assent on December 15, 2010.   New draft regulations from CRTC and Industry Canada are expected to be released for consultation in Q1 2012; implementation of the statute is expected later in 2012.

Sun Life will continue to monitor the progress of the regulations, in order to implement and communicate any required changes.

Bill C-12 -Amendments to PIPEDA 

Bill C-12, Safeguarding Canadians' Personal Information Act, is a reintroduction of Bill C-29 and was tabled in September, 2011. If passed, it will amend the Protection of Personal Information and Electronic Documents Act (" PIPEDA").

C-12 intends to protect and empower customers, clarify and streamline rules for organizations, improve investigation and enforcement of PIPEDA, and improve the language of the legislation. 

Proposed key amendments to PIPEDA include: a definition of 'valid consent' for the purpose of collecting, using or disclosing information, prescribed situations where personal information can be collected, used or disclosed without the individual's knowledge or consent a requirement to report material breaches to the Privacy Commissioner of Canada and to notify affected individuals and organizations.

While C-12 is still in early stages, Sun Life has already incorporated some of the proposed changes into our business practices, and will continue to monitor its progress.  The Bill is expected to be enacted as currently drafted. 

Questions?

Please contact your Sun Life Financial group benefits representative.