In these post-pandemic times, private insurance plans face increased pressure from rising drug costs. In a profoundly changing industry, several measures have already been taken to control drug costs in 2022 and 2023, but what lies ahead for 2024?
This post summarizes a feature article published in Benefits and Pensions Monitor, including comments from Massimo Nini, Vice President, Consulting, Underwriting and Actuarial, AGA Benefit Solutions.
What’s changed since the pandemic
The pandemic upended the lives of Canadians, taking a significant toll on their mental health. This is evidenced by an increasing use of antidepressants, particularly among youth below 19 years of age.
Moreover, as some conditions worsened due to delays in treatments and surgical procedures during the pandemic, many had to rely on additional medication.
Other factors come into play
In addition to post-pandemic factors, other elements have a major impact on group insurance plans. For example, the use of diabetic medications also soared in recent years. Diabetes has replaced inflammatory diseases as the top drug category for claims in 2022, although the exploding costs can be partly explained by the fact that diabetes drugs are also prescribed for their weight loss properties.
Finally, new drugs have been introduced to treat rare illnesses. And new drugs obviously entail sky-high costs!
Measures that are paying off
Different actions have been implemented over the years to control drug costs.
Just think of mandatory substitution of brand name drugs with much less expensive generic versions when they exist. The same applies to biosimilars, which are increasingly replacing reference biologics as a much more affordable alternative.
More recently, discussions have turned to prior authorization and step care, particularly in the case of drugs designed for diabetes but used to treat obesity.
So, what should be offered in an insurance plan?
Massimo Nini offers a new perspective on the factors to be considered in order to make the best decision, in the current circumstances. He was one of the main contributors to the article published in the February 8 issue of Benefits and Pensions Monitor.
In his view, plan administrators must carefully weigh several elements to measure the return on investment (ROI) of their plan. Many of them want to cater to the majority while at the same time recognizing the diverse individual needs of plan members.
The recent years’ inflation surge and the rising cost of living sometimes force families to put their health on the back seat in order to afford food and housing. Consequently, corporate decisions must be based on company values and DEI (diversity, equity, inclusion) principles. A healthy employee is generally more productive on the job!
For other advice and much more information on this topic, please feel free to read the full article. You will learn more about the factors that will help you make an informed decision with respect to drug insurance.
Caroline joined the AGA Group Insurance team in the fall of 2021. Before making the switch to group insurance in 2019, she spent nearly 20 years in the banking industry, more specifically in commercial financing for car dealerships. Customer satisfaction and success are her top priorities. Her professionalism and dynamism make her a group insurance advisor who listens to her customers' needs and is proactive in her approach.