Exorbitantly priced drugs challenge Canadian families, benefit plans

What do the drug spending trends of the last 15 years tell us about the future health of Canadian families and the sustainability of their private prescription benefit plans?

For some context, here’s a brief recap of the numbers: Between 2000 and 2009, the average annual prescription drug spending increase in Canada was an alarming 9.3%. But between 2009 and 2012, that rate slowed dramatically, to just 3.9%; in 2014, private drug plan spending fell in six of the 10 provinces. (Private plans aren’t the only source of drug spending, of course, but these figures provide valuable insights into other sources for which data is not yet available.)

Between 2009 and 2014, patents expired on a number of commonly used drugs, which led to the introduction of more affordable generics. In roughly the same period, provincial governments implemented new drug policies that also lowered costs. The combined result was welcome relief for Canadian families, private plan sponsors and taxpayer-funded health plans.

But the latest Express Scripts Canada Drug Trend Report shows that, in 2015, the tides turned once again: private plan spending increased in all provinces except Saskatchewan, by between 1.6% and 5.9% [1]. This shift is a strong signal that new, high-priced therapies are once again driving the trends in drug spending.

They also represent an enormous challenge for individual families and prescription benefit plan sponsors. For the parent of a sick child, it can be devastating to learn there is a new, potentially life-saving treatment available, but that it costs hundreds of thousands of dollars[2] and isn’t covered by their health plan. For companies that provide comprehensive prescription coverage, a single very high-cost claim can have a critical impact.

These very costly drugs are driving overall spending trends, but they also represent an enormous challenge for individual families and prescription benefit plan sponsors.

Over the past 30 years, pharmaceutical development and marketing strategies have shifted from a focus on traditional, lower-cost drugs that helped vast numbers of people, to specialty drugs that treat complex conditions such as cancer and multiple sclerosis, which benefit fewer patients and often come with exorbitant price tags.

Today, roughly 30% of private drug plan spending goes to specialty medication claims, a number that was near zero just a few decades ago and is expected to increase to 42% by 2020[3]. Private benefit plans alone are expected to face a $5.6 billion price tag[4] for specialty medications within the next five years.

Some public and private plans have implemented coverage limits to protect plan sustainability. While understandable given funding limitations, this is a last-ditch measure that can be devastating to patients who need these life-saving drugs, and for their families.

Exorbitantly priced drugs present a challenge that must be addressed at every level of policy leadership. But Express Scripts Canada’s research shows that there are immediate, proven solutions that provide vital protection for families and private plan sponsors.

By providing the right support at the right time, these solutions make it possible for members of the private benefit plans we manage and of the Express Scripts Canada Pharmacy to make informed drug and pharmacy decisions. Better decisions mean billions of dollars in potential savings[5] for families and employers, along with better health. These savings also help private plans pay for high-cost drugs without shifting more of the financial burden to Canadian families.

[1] Express Scripts Canada 2015 Drug Trend Report, page 6
[2] Express Scripts Canada 2015 Drug Trend Report, page 46
[3] Express Scripts Canada 2015 Drug Trend Report, page 11
[4] Express Scripts Canada 2015 Drug Trend Report, page 5
[5] Express Scripts Canada 2015 Drug Trend Report, page 7