Understanding Needs is Key to Sustainable Benefits

This Benefits Canada article by IMS Brogan discusses the changing landscape of drug cost and how it affect the changing evolution of benefit plans.

In 2011, the amount paid toward drug coverage by Canadian private drug plans reached $7.6 billion, an increase of $1.8 billion over the past five years, according to IMS Brogan’s Private Drug Plan Database. The corresponding increase in cost to plan sponsors has spurred discussions on the sustainability of group insurance plans and the need for a long-term perspective on potential solutions.

Specialty drugs have become a key focus in recent cost-containment discussions, due, partly, to their inherent high cost and increasing availability over the past decade. In 2001, there were only eight such products on the market with an annual treatment cost of more than $10,000 per user, only one of which cost more than $25,000. By 2011, this number had increased to 76 (with 25 over $25,000 and two exceeding $250,000).

As manufacturers increasingly focus their research and development efforts on these costly specialized medicines, this trend is expected to continue. It’s no surprise, therefore, that group insurance providers and intermediaries are concerned for the affordability of some drug plans and are questioning the long-term impact to their own solvency.

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