August 2007 Focus Update #123
Important Group Benefits News
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August 2007 Focus Update #123
In this issue ...
In recent years some provinces have expanded the scope of services of some medical professionals, such as nurses, optometrists and pharmacists, to include some prescribing services. Several years ago we updated our administrative practices and contract wording to reflect the expanded prescribing authority of these practitioners.
The wording below reflects our current administrative practice:
|Certain drugs prescribed by other qualified health professionals will be reimbursed the same way as if the drugs were prescribed by a physician or a dentist if the applicable provincial legislation permits them to prescribe those drugs.|
We administer all plans on the above basis, and, at the next revision, we’ll update those plans that do not reflect our current administrative practice.
Effective April 1, 2007, pharmacists in Alberta have the authority to prescribe certain drugs, administer some injections, and play a bigger role in medication management. This follows changes to the Pharmacists Profession Regulation and the Pharmacy and Drug Act that were previously enacted by the province. (See “Alberta pharmacists authorized to prescribe certain drugs” in February 2007 Focus Update # 107 ).
This authority will allow pharmacists to work more effectively with patients and health care practitioners as part of a health care team.
Pharmacists can now do:
Initial access prescribing – to treat minor, self-diagnosed or self-limiting conditions, or in urgent or emergency situations
Prescription modification – adjust dosages or formulation; provide a therapeutic alternative; monitor and refill prescriptions; and provide emergency supplies of previously prescribed medication
Comprehensive drug therapy management, in collaboration with other health care professionals
Administering of some drugs by injection
The Alberta College of Pharmacists has established a number of criteria that pharmacists must meet to be eligible to perform these services. Pharmacists can choose which expanded services they want to add to their practice.
As explained in the above article, “Our claims practice for practitioners eligible to prescribe drugs”, we reimburse certain drugs prescribed by qualified health professionals if legislation permits them to prescribe those drugs. This means that we will accept claims for drugs prescribed by a pharmacist in Alberta.
Any charges for the pharmacist’s prescribing services will be over and above the dispensing fee. Alberta Health and Wellness hasn’t indicated if it will cover these new charges.
We don’t cover professional fees for pharmacists under our extended health care plans. However, these fees would be eligible expenses under a Health Spending Account.
If you have any questions, please contact your Group Benefits representative.
Since early 2006 we’ve been following Ontario initiatives aimed at improving its provincial drug system. (see Focus Update # 102). When Bill 102, Transparent Drug System for Patients Act, was passed in June 2006, it introduced changes to the Ontario Drug Benefit (ODB) program.
We now have more information on the following:
Generic drug pricing and drug mark-up
ODB as second payor
Off-formulary drug interchangeability
Generic drug pricing and mark-up on drugs
These key ODB changes – outlined below and now in effect – created a stir in the drug benefits marketplace because of their potential impact on pricing policies for drug companies, pharmacists and private drug plans.
Generic drug pricing: the price for generic drugs listed in the ODB formulary was set at no more than 50% of the price for the equivalent brand name drug (some exceptions will apply). Previously, the price for generics was 63% of the brand price. This change came into effect October 2006.
Mark-up on drugs: the mark-up that the ODB will pay pharmacies on the ingredient cost of an ODB listed drug was set at 8%. Previously the mark-up was 10%. This change came into effect April 2007.
Given the pricing implications, the changes raised some questions:
Will drug companies have two separate prices for their generic products?
Will pharmacists charge a different price for non-ODB customers?
Will private drug plans change their price files to align with the ODB change?
Response from pharmacists and drug companies
Because the pharmacy community was concerned about the impact of the ODB’s reduced mark-up and generic pricing on their revenue, they worked closely with the generic drug companies to implement a “dual pricing system” for generic drugs.
Generic companies established an ODB price (up to 50% of brand) and a non-ODB price (currently at 63% of brand, the pre-Bill 102 level).
Pharmacies set up:
separate pricing inventories for ODB and non-ODB customers.
processes/measures to ensure that their mark-up for drugs dispensed to non-ODB customers remained at 10% (and not reduced to ODB’s level of 8%).
Pharmacists message to private drug plan providers
Pharmacists said that drug plan providers adopting the lower ODB generic prices and mark-up could expect their members to pay the higher prices at the pharmacy. This meant that pharmacists had every intention of charging patients/members for excess amounts not covered by the plan.
In addition, there were also suggestions that if private plans adopted the ODB pricing, pharmacists may refuse to accept the drug card, leaving the cardholder to pay out-of-pocket and file a claim.
Sun Life Financial’s response
Over the past several months, Sun Life Financial and Emergis, our pharmacy benefit manager, have been investigating whether to adjust their drug price files to align with the reduced ODB price and mark-up.
At this point, we haven’t made any changes.
Why not adopt the ODB pricing?
Private drug plans that adopt the ODB pricing would realize considerable savings. However, as noted above, the impact could be significant for plan members.
As part of our decision to remain “status quo”, we did obtain feedback from some of our plan sponsors and advisors. Given the potential impact on members, they agreed not to make any change at this time.
ODB paying pharmacists for their professional services
To help offset reduced pharmacy revenue because of Bill 102, the ODB introduced a new program where they will reimburse certain pharmacy professional services for ODB patients. The first phase of the program includes:
One-on-one medication review for ODB patients taking three or more prescription medications.
Pharmacists will be reimbursed $50 for each completed medication review, which should take 20-30 minutes.
Additional services are still under consideration at the ODB.
Note: While the above MedsCheck Program was introduced for ODB recipients in April, effective July 17, it was expanded to all Ontario residents who take three or more medications for chronic conditions. The program is free and available to eligible patients once each year. It is hoped this program will result in better patient outcomes by ensuring patients are taking their medications properly and safely.
ODB as second payor
The proposal to make the ODB second payor to the federal Public Service Health Care plan (PSHCP) and plans that cover working seniors has been put on hold. We have no indication whether this will be brought forth again. This is good news for our plan sponsors, at least for now.
Off-formulary drug interchangeability (OFI)
Previously, the list of interchangeable drugs was limited to generics for brand drugs listed on the ODB formulary. This list will be expanded to include generics for brand drugs not listed on the formulary. Interchangeability will extend to drugs in different forms (e.g. capsules vs. tablets).
This change will lead to the availability of more, lower-priced generic drugs. This increased access to generics may result in savings for plan sponsors.
Since May 2006 we’ve been following a Cancer Care Ontario proposal that would allow Ontario hospitals to sell and administer some cancer drugs [e.g. intravenous (IV) cancer drugs] on a patient-pay basis. (See October 2006 Focus Update #102 ). If adopted by the province, the proposal would eliminate the need for public funding of these drugs and potentially put the onus on private plans to cover the costs.
While the Ministry of Health expressed support for the proposal group’s recommendations, it indicated that it would consult with Ontario residents before making any decisions. There has been no further response from the Ministry on Cancer Care Ontario’s proposal. Some Ontario hospitals have started to administer unfunded IV drugs and charge patients.
Lack of funding for cancer drugs an issue across Canada
The issue of unfunded IV cancer drugs is a bigger one in Ontario because the province funds fewer new oncology drugs than most other provinces. Still, the funding issue is a concern right across Canada.
There’s a movement toward having patients pay for the drugs rather than hospitals or other government agencies funding them. There is also a move to set up private infusion clinics where patients can have the drugs administered.
Private drug plans – insurance industry position
Drugs administered in hospitals are generally not covered under private drug plans. The insurance industry’s position is that billing in-patients or out-patients for hospital-administered drugs contravenes the Canada Health Act. Medically necessary hospital services should be insured services under the Act and provided at no cost to the patient.
Drugs administered in private infusion clinics may be covered by private plans, subject to contractual provisions.
We anticipate increased claims for these costly IV oncology drugs. And as the trend for patients turning to private clinics is expected to continue, these patients will look to their drug plan for reimbursement. In addition, there are several oncology drugs in development, many of them oral medications.
Regardless of the decisions made concerning IV drugs administered in hospitals or infusion clinics, private plans will continue to see increasing costs as these new expensive drugs come to market.
We’re staying on top of the issue
As mentioned in the previous Focus Update, we have an internal working group looking at what steps we need to take to help manage this situation. We are also an active participant in the Canadian Life and Health Insurance Association (CLHIA) Oncology Working Group.
One of the group’s first steps is to seek clarification from the Federal Health Minister regarding hospitals’ practice of charging patients for drugs administered in a hospital. In 2003, the health minister confirmed that this wasn’t allowed under the Canada Health Act. Among the issues being discussed by the industry working group is the possibility of industry pooling for these drugs.
We’ll keep you posted as to any developments.
The Quebec Health Ministry announced in February 2007 that it was implementing the Quebec Drug Policy. To be phased in over a three-year period, the policy focuses on:
Access to drugs
Fair and reasonable prices for drug therapies
Optimum drug use
Maintaining a thriving pharmaceutical industry in Quebec
We expect that some of the Drug Policy’s initiatives will affect private drug plan costs.
Removal of drug manufacturer price freeze
First on the agenda is to remove a drug manufacturer price freeze that has been in force since 1994. Manufacturers can now increase the price of formulary drugs every April by as much as the Consumer Price Index (CPI) for that year. The CPI for 2007 is 2.03%. Higher increases may be authorized in rare cases, but any excess cost over the CPI will be billed to the patient, not the provincial drug plan.
Because Quebec’s drug price list has been considered the benchmark for other provinces, this lifting of the price freeze will likely affect drug prices in other provinces. That in turn could have an impact on private plan costs.
The pricing structure in Quebec
In Quebec, the agreement between the Association des Pharmaciens Propriétaires du Québec and third party payors such as Emergis allows payment for a usual and customary price. The price submitted by a Quebec pharmacist includes the manufacturer ingredient cost, a usual and customary mark-up, and a usual and customary dispensing fee.
While the ingredient cost had been frozen since 1994, the mark-up and the dispensing fee have increased over the years in reaction to market trends and to keep up with the inflation rate. This may help explain why we have observed price increases in Quebec over the years in spite of the manufacturer price freeze.
Other Drug Policy resolutions that may affect plan costs
New life-saving drugs will be fast-tracked for addition to the provincial formulary. Drugs listed under the provincial plan, by law, must be covered by the private plan.
Generic pricing will be decreased (to 60% / 54% of the brand name price. The cost of generics in Quebec was previously 70% and 63% for the respective first and second generics listed on the provincial formulary.
Wholesaler mark-ups were lowered to 7% from 9%, thereby lowering the pharmacist’s acquisition cost.
Professional allowances will be limited to 20% of purchases.
Patients will be allowed to purchase selected drug therapies in the community setting and bring the drug for administration in a hospital setting.
At this point it is too soon to tell what impact Quebec’s Drug Policy will have on our drug plans. We will continue to monitor the impact of these changes.
On July 1, the government of Saskatchewan implemented a new Seniors' Drug Plan. Under the program, seniors will pay no more than $15 per prescription for drugs in the Saskatchewan Drug Formulary.
Since seniors are automatically eligible for the program once they turn 65, they don't need to apply. More information about the program, including a fact sheet, is available at http://www.health.gov.sk.ca/ (available in English only).
Impact on drug plans
If you have a drug plan that provides coverage for Saskatchewan residents over age 65, you will see reduced claims costs for Saskatchewan seniors. We don't, however, see the impact as being significant for most of our customers with seniors in Saskatchewan.
This change will not affect the claims thresholds that we have in place for Saskatchewan plan members.