1 SPONSORED CONTENT 6th Annual Benefits Advisors’ Drug Plan Outlook - 2019

Back row (left to right): Jean-Philippe Bernard, Normandin Beaudry; Janine McInnis, Hub International; Sandra Ventin, Gallagher; Johnny Ma, Mapol Inc.; Dave Patriarche, Mainstay Insurance Brokerage Inc.; Gordon Polk, Mapol Inc.; John McGrath, ZLC Financial; Bradley McCaw, Alexion Pharmaceuticals, Inc.; Yvan Tran, Mapol Inc.

Front row (left to right): Noel MacKay, Cowan Insurance Group; Corinne Razem, Mapol Inc., Mike Hughes, Benefits and Pensions Monitor, Suzanne Nagy, SCN Consulting; Vic Skot, Benefit Partners/People Corporation; Sue-Lee Pring, Mapol Inc.; Tari Duguay, Cowan Insurance Group; Kristina MacPherson, Benefits by Design; Hazel Kwan, Mapol Inc.

Absent: Ilias Iliopoulos, AstraZeneca Canada Inc.

How are environmental activities and trends influencing drug plan designs?

6th Annual Benefits Advisors’ Drug Plan Outlook - 2019

Discussions pertaining to drug plan management trends and mod-ernization of drug plan policies were on the table again at the 6th Annual Benefits Advisors’ Drug Plan Outlook. Government policies relating to pricing guidelines for new patented medicines,

as well as the potential for having a National Pharmacare program were also captured under environmental influences.

Mapol Inc. brought together benefits advisors from across Canada with representatives of Canada’s innovative pharmaceutical manufacturers on December 12, 2019. The purpose of this meeting was to review key devel-opments and trends that occurred in 2019 within the benefits industry as they pertain to drug plan policies. The discussions also looked at factors that might affect the design of drug plans in the months ahead. These con-siderations included:

• coverage of drugs under optional categories or historically referred to as lifestyle drugs;

• private drug plan coverage of drugs for rare diseases;• the role of digital health solutions to better manage

chronic conditions.

Awake at Night

In a pre-meeting survey, the benefits advisors were asked to rank the “Top 3 Things Keeping You Up at Night”. The majority of the advisors were most concerned about the following topics:

1) The rate of pooling and stop-loss premium increases 2) Impact of high cost specialty drugs 3) Continued ‘silo’ thinking by private drug plans - no connection

between drug plan costs, productivity, absenteeism and disabilityAs the meeting got underway, the advisors discussed the various actions

their clients are taking in response to year-over-year cost pressures.

Over the last 12 months, which drug plan management strategy have your plan sponsors requested the most to be implemented? (more than 1 response may be included) 2018 2019Tiered Managed Plans 17% 24%Plan Maximums 22% 19%Prior Authorization 17% 14%Preferred Provider Networks 9% 14%Conversion to Health Care Spending Account Only 13% 10%[Top 5 responses are shown]

Modernization of Drug Plan Policies

Over the last few years, insurers implemented increased levels of “due diligence” into their group benefits contracts. Some examples of mass con-tract amendments include Manulife’s DrugWatch™ program, Canada Life’s (formerly Great-West Life) SMART (Sustainable, Managed And Reasonable Treatment) drug plan and Sun Life’s Drug Risk Management (DRM) pro-gram. These contractual changes allow these insurers and others to delay drug plan coverage decisions for new drugs and new indications approved by Health Canada until their internal drug review process is completed. While each program has different criteria for identifying which drugs will undergo this review process, often times new drugs that may be deemed high cost and/or potentially high utilization are targeted. The outcome of each review may result in coverage, or possibly coverage with claims man-agement features, or special pricing agreements in place, or else exclusion from the insurer’s plans. The time-to-listing decision will vary by drug but may take as long as 6 or 9 months after the drug is approved by Health Canada. In some cases, the insurer review process may rely on the outcome

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of the Canadian Agency for Drugs and Technologies in Health (CADTH) Common Drug Review (CDR), public provincial formularies or other inter-national review organizations.

Do you feel a formulary review turnaround time of 6 to 9 months is reasonable for your plan sponsors? 2018 2019Yes 40% 30%No 10% 40%Not Sure 50% 30%

Rate your level of agreement with this statement “My clients have seen drug plan savings as a result of insurer due diligence drug review programs.” 2018 2019Strongly Agree 0% 0%Moderately Agree 20% 10%Not Sure 30% 20%Moderately Disagree 10% 60%Strongly Disagree 40% 10%

Optional Drug Categories – Time for Change?

Suzanne Nagy (SCN Consulting) led discussions about categories of drugs/treatments that have historically been referred to as “lifestyle” or optional drug categories. These include vaccines, weight loss, smoking ces-sation, erectile dysfunction, sexual health and fertility treatments.

“Although private insurance is not intended to pay for lifestyle choices, it does pay for the negative effects of lifestyle choices such as cardiovascular disease, hypertension, cancer and diabetes.”

Without a national immunization policy within Canada, many employ-ers have historically focused on supplementing public health coverage with vaccine coverage for adults. Plan designs for employees may not be consis-tent because it’s difficult to carve out travel and individual (thera-peutic) vaccines with many em-ployers requesting restrictive con-tract language such as stipulating coverage for ‘injectable’ vaccines, ‘allergy’ vaccines, or possibly just ‘Hepatitis B’ or “shingles” vaccines as a way to control costs. With the introduction of oncology vaccines, employers are looking more care-fully at the type of coverage they are offering and Suzanne Nagy emphasized that overall vaccine coverage should continue to be a focus of discussion as employers recognize the value vaccines can have on their workforce.

Smoking cessation is another example where treatments need to be viewed within the context of helping employees be healthy and pre-vent common chronic diseases such as COPD and asthma. Without sup-port, it can take up to 30 attempts for a smoker to quit the habit. Coverage for nicotine replacement therapy alone can improve these odds by two or three times. If an employer compares the cost of treatments to the costs that smokers incur with respect to lost productivity and absenteeism, a benefits plan could pay the equivalent of 14 treatments to offset the costs of one smoker on the payroll for one year. Coverage for smoking cessation has come a long way and could be used as a proxy for other optional drug categories in terms of the value in modernizing the benefits contract.

Health benefit issues relating to sexual health (including erectile dys-function, contraception, HIV prevention, HPV prevention, transgender and

fertility coverage) are becoming more complicated. As the workforce ages, so does the manifestation of symptoms and conditions related to aging. To keep aging workers healthy and productive, benefits plans have to address much more than just coverage of products related to so-called lifestyle prac-tices. Should we move away from “life-style products” and move towards “life-assistance”?

Have you had a discussion with a plan sponsor on the coverage of Traditional Optional Drug Categories in the past 12 months? If yes, which categories?

Vaccines 33%Blood Glucose Testing 22%Weight Loss 11%Smoking Cessation 11%Erectile Dysfunction 7%Sexual Health 7%None 4%

Do plan sponsors see the value in covering vaccines in their drug plans?

Yes 60%

No 0%

Not Sure 40%

As a further example, some employers are starting to carve out coverage for medical cannabis under the drug plan or the extended health benefits plan. Are we moving from a cafeteria style of benefits coverage to that of an à la carte menu?

Some advisors are suggesting that plan sponsors should move towards a more holistic view of health support through modernization of drug plans and other health benefits. Updating and implementing changes to contract language will continue to be a challenge for both plan sponsors and benefits advisors.

Rare Diseases – Is private plan pooling improving coverage of drugs to treat rare diseases?

Brad McCaw of Alexion Pharmaceuticals gave an overview of the land-scape for rare diseases in Canada. Of the 7,000+ rare diseases that exist, only 5% have available treatments. 80% of rare diseases are genetically based, of which 50% affect children, and of those, almost half die before the age of five. By the end of 2018, there were 79 drugs for rare diseases approved in Canada (40 for non-cancer; 39 for cancer).

The time-to-listing for new specialty drugs to get listed on provincial government formularies takes 499 to 571 days and drugs for rare diseases often take longer to get listed. Given the pervasive media coverage of an-ecdotal examples for patients who cannot get coverage for drugs that treat rare diseases, the topic has become a political issue. Inside and outside the context of a Na-tional Pharmacare program, plan sponsors and plan advisors are concerned about the pooling (pre-mium) costs for covering high-cost drugs that apply to diseases that require long-term treatments. Of-ten times, drugs for rare disease are more expensive as there are fewer patients who need the treat-ments yet the costs to develop and obtain approval are just as high, yet these Rare disease drugs rep-resents less than 2% of total drug plan budgets. Also, drugs for rare disease are very targeted to a spe-

Suzanne Nagy, SCN Consulting

Brad McCaw, Alexion Pharmaceuticals

cific purpose for devastating illnesses and often do not have the “indication creep” as may be associated with other specialty drugs.

Do you discuss coverage for Rare Disease drugs separately from other “High Cost” Specialty Drugs?

Yes 30%No 70%Don’t Know 0%

Do you feel a new business model could/should exist for coverage of Rare Disease drugs to maintain drug plan sustainability?

Yes 78%No 0%Don’t Know 22%

National Pharmacare – Where are we heading?

Chris Bonnett (H3 Consulting) led discussions on the prospects for a new national pharmacare program to be introduced in the next few years. As it stands now, the private payer market provides complementary cover-age for drugs and people not included in provincial government drug plans. Across all provinces, there is a patchwork of plan designs that leaves a few Canadians without any coverage and a significant number (about 2 million) without enough insurance for necessary drugs.

The prospect of national pharmacare now looks less likely given minimal funding and limited progress by the federal government in the last year. Provincial and territorial governments have not engaged with Ottawa and they are constitutionally responsible for health care. National pharmacare is above all a political negotiation and decision.

Many feel that drug insurance should be universal. Rather than a fully public single payer plan under medicare, a more feasible approach is to share drug costs between governments, employers and citizens. Even without a comprehensive national pharmacare program, important and af-fordable improvements can still be made, including development of a na-

tional standard formulary, a cap on catastrophic out-of-pocket costs for all Canadians and funding for drugs for rare diseases. Ideally, a national medicines strategy should establish our goals, process and outcomes for these steps and others to follow. Progress requires new federal money that is adequate and permanent.

For benefits advisors, there are a few key questions. First, what are the implications of these changes for employer-sponsored drug plans? Secondly, how can advisors com-municate with their clients on these matters in a knowledgeable and bal-anced way? Third, how can advisors identify and effectively relay the pref-erences and needs of their clients to governments? Given the diversity of employers and many interested

stakeholders, this is very challenging. For example, some smaller employ-ers would happily terminate their drug plans in favour of a new public drug plan. But if a new public program is less generous, will employers be willing to top-up coverage? How can workplace needs be included in the health and financial evaluation of new drugs?

Benefits advisors need clear and consistent positions to inform their clients and insurers, and influence public policy. There is no forum or as-sociation to help advisors consider the impact on their own operations from initiatives such as national pharmacare, reform of the Patented Medicine Prices Review Board, or a national strategy for drugs for rare diseases. Since employers will remain as funders, they too need a voice in how these

changes are developed, managed and governed.Given the current environment and many pressing priorities for govern-

ments, private drug plans are likely to continue for the foreseeable future. Regardless of progress on national pharmacare, private and provincial drug plans could be better coordinated to ensure adequate and affordable univer-sal coverage of prescription drugs.

Can you estimate the % of your plan sponsors that have brought up National Pharmacare as a discussion point over the past 12 months?

1% to 10% 22%11% to 20% 33%21% to 30% 22%71% to 80% 11%81% to 90% 11%

Rate your level of agreement with this statement: “I am concerned about how National Pharmacare may impact my business.”

Strongly Agree 20%Moderately Agree 40%Not Sure 10%Moderately Disagree 10%Strongly Disagree 20%

Environmental Trends in the Pharmaceutical Market

The member companies of Innovative Medicines Canada (IMC) include pharmaceutical manufacturers that develop treatments and vaccines for numerous diseases. These treatments have reduced costs associated with disease burdens, such as workplace productivity,  for employees and their dependents. At the meeting, Joe Farago of IMC presented an overview of key trends in the pharmaceutical market.

First and foremost, Joe explained how pharmaceutical manufacturers may be impacted by new pricing guidelines later this year. Based upon case studies prepared by staff of the Patented Medicine Prices Review Board (PMPRB), the impact of the proposed regulations will be to drive manu-facturer list prices to levels so low (about 30% to 90% below most interna-tional list prices) that pharmaceutical manufacturers will likely not bring new drugs to Canada. One of the key impacts on private drug plans is that manufacturer sponsored patient support programs (that currently support 673,000 patients) may have to withdraw funding if drug prices (for prod-ucts within these programs) are forced lower. At this time, the value of these support programs is estimated to be $900 million. Without these programs in place, extra costs would have to be assumed by plan sponsors and/or plan members.

Joe updated the group on an issue that the Outlook meeting has been tracking over four years. Specifically, the time it takes to get a drug reim-bursed by public drug plans is now at an average of 534 days. This repre-

Janine McInnis, Hub International

Sandra Ventin, GallagherJean-Philippe Bernard, Normandin Beaudry

Johnny Ma, Mapol Inc.

3 SPONSORED CONTENT 6th Annual Benefits Advisors’ Drug Plan Outlook - 2019

This article is produced by Mapol Inc. and was made possible through the support of Alexion Pharmaceuticals, Inc., AstraZeneca Canada, GlaxoSmithKline Inc., and Teva Canada Innovation. The opinions expressed in this material are those of the authors and do not necessarily reflect the views of the sponsors.

sents almost 1.5 years after Health Canada has approved the drug for sale. Health technology assessments (HTA) essentially refer to the review pro-cesses that are utilized by publicly funded drug plans. Each of the provin-cial government drug plans refer to the review recommendations issued by Common Drug Review (CDR) as administered by CADTH. Similarly, more private insurers are starting to look at CDR recommendations to determine if and how a new drug should be covered under plan sponsor drug plans. Many still debate whether this approach is appropriate for private payer plans given the different patient populations and needs of each market.

The pharmaceutical industry recognizes the challenges faced by Cana-dian employers and that the need for access to new medicines will require partnerships and collaboration across payers and stakeholders. Both IMC and its members will continue to seek opportunities to work with various stakeholders on initiatives that support the improvement of employee health.

Digital Health Solutions – Where are we now?

When we mention digital health solutions, many of us think of mobile apps. A year ago, there were over 318,000  health apps  available on the top  app  stores worldwide, nearly double the  number  of  apps  available in 2015 – with more than 200 apps being added each day. This suggests that we are not only interested in monitoring and improving our health, but we seek out solutions that will help us achieve this. Given the role that drugs have in the treatment of medical conditions, the integration of technology and drug management is now happening on many different fronts.

Various insurers have launched apps to address self-management of health benefits, and apps to provide access to resources such as health pro-viders and health coaches. Apps cannot replace the role of health providers but they can be a valuable tool in connecting plan members with providers on a more regular basis.

As a specific example of using an app to address personal health, Teva Canada Innovation is developing a respiratory inhaler that has built-in sen-sors, which can track how well and how often the inhaler is being used. Each time that the inhaler dispenses medicine to the patient, there are built-in sensors that send information to a smartphone app so that the patient can view and share information that provides feedback on appropriate in-halation technique and adherence to therapy, which could lead to better patient outcomes. In addition, utilization information can be transmitted to healthcare professionals. Over-utilization of the inhaler can be quickly identified and summary data can be available for time/date of use, for noti-fication of refills, and for quality of inhalations.

Rate your level of agreement with this statement:“Digital health apps will improve patient outcomes.”

Strongly Agree 20%Moderately Agree 60%Not Sure 10%Moderately Disagree 10%Strongly Disagree 0%

Going Forward

This year’s meeting highlight-ed some of the challenges faced by benefits advisors as they try to keep plan sponsors up-to-date with market changes and inno-vations being promoted to im-prove benefits plan management. Transparency of data and infor-mation that comes – or poten-tially could come – from insurers remains a challenge when broad policy changes are made. This not only applies to claims/approval processes, but it also applies to premium setting processes. Al-though insurers and advisors may not be able to control the ex-fac-tory costs of drugs, the need for new treatments and the need for patient support programs remain critical for employee health and productivity.

In terms of drug plan costs, the Advisors were asked to identify the top 3 therapeutic classes that are of greatest concern to them and to their plan sponsor clients.

Depression 29%Diabetes 25%Cancer 14%Inflammatory Conditions 14%Migraine 7%High Blood Pressure 4%Multiple Sclerosis 4%Other (ADHD) 4%Asthma / COPD 0%Hepatitis C 0%High Cholesterol 0%Infections 0%Ulcers 0%

As revealed in the pre-meeting survey by the benefits advisors, the impact of high cost drugs and the related impact on pooling costs and renewal premiums were the greatest concerns as we move forward into 2020 and beyond. As much as possible, the advisors will seek out in-novations within health benefits offerings that address both costs and better employee health. The unpredictable factors include government policies, either at the federal or provincial level, that could have an im-pact on affordable plan design options (i.e. through integration) and on plan member access to treatments (i.e. availability and timeliness of new drugs).

Vic Skot, Benefit Partners/People Corporation

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