Group Benefits

Claims Increasing

It has now been over 24 months since the corona virus pandemic started and that has had an impact on the health of plan members as well as the structure of their plans.

Claims for diabetes and cancer treatment drugs are returning to pre-pandemic levels according to a recent report from Express Scripts Canada. As restrictions were lifted, diabetes claims increased 9.4% while claims for cancer treatments increased 5.4%.

According to a 2021 report by Telus Health, specialty drugs (biologics and their generic equivalents, biosimilars) remain the biggest factor influencing private drug plans, accounting for a third of overall costs despite being used by just 1.3% of total claimants.

While the overall private drug plan spend per member increased by 4.3% in 2021, the actual percentage of plan members that made a claim decreased by 0.3% while the spend per claimant increased by 4.9%. Taking a deeper dive into the numbers, the following also indicates additional information on the cost drivers:

• For specialty drugs, the year-over-year spend per plan member increased by 6.8%
• The primary driver was utilization with a 8.3% increase in claimants for inflammatory conditions and a 4.8% increase in claimants for the treatment of multiple sclerosis
• The top two therapeutic classes were the same in 2021 as they were in 2020 led by inflammatory conditions at 13.3% of overall spend and diabetes which accounted for 10.6% of the total spend
• However, the spend on depression medications jumped from 4th to 3rd with 5.1% of the total spend, skin conditions increased from 11th place to 8th making up 3.2% of overall spend and the spend for anti-obesity drugs increased by 23% due to a 22% increase in claimants

Key takeaways for plan sponsors:

• Use of prior authorization helps manage the costs associated with high cost drugs to the balance of the best health outcomes by getting the right drugs to treat the condition with the economic sustainability of the plan and the patient experience
• Biosimilars are growing in popularity for plan sponsors seeking to reduce these expenditures

Residency & your HCSA

A recent decision by an arbitrator rejected the argument that an employer cannot provide a Health Care Spending Account (HCSA) to non-residents under the Canada Revenue Agency (CRA). The ruling noted the CRA interpretation bulletin did not prohibit such payments.

Group Savings

DC Pension Audits No Longer Required

Effective February 11, but applied retroactively, pension plan audits are no longer required for Defined Contribution (DC) pension plans. For example, a DC pension plan with a December 31, 2021 year-end that would normally have filed its audit by June 30, 2022, falls under these new rules and does not require an audit. DC plans will still need to file a copy of the unaudited pension fund financial statements.

The Financial Services Regulatory Authority of Ontario can still order an audit be performed in exceptional circumstances which can include lost faith in the pension plan administrator/custodian/record-keeper.

Legislative

Insurance Premium Tax Rate Reduction

Plan sponsors with members residing in Quebec should realize savings due to a reduction in the insurance premium tax for group life and accident & sickness insurance from 3.48% to 3.3%. This change is effective April 1st.

Patented Medicines Regulation Amendments Dropped

As reported in earlier editions of Current Trends, the Canadian government had initially announced proposed changes to the Patented Medicines Regulations back in 2019. This was met with significant lobbying from the pharmaceutical sector which has resulted in a decision by the government to not implement certain amendments to these regulations. The statement from the Minister of Health indicates Health Canada will neither move forward with implementing amendments related to economic drug price factors nor with the requirement to report net prices. This follows the Quebec Court of Appeal’s decision, which was raised by Merck Canada Inc., in which the court found that amendments that would consider whether a drug price is excessive and a requirement to file information net of all price adjustments was unconstitutional.

Health Canada will be proceeding with implementing a change in the comparator countries used for benchmarking drug prices and also for reductions in reporting requirements for those medicines at lowest risk of excessive pricing, e.g. vaccines and biosimilars. These changes are to be effective July 1, 2022.

The Canadian courts have sent strong signals that general price control and consumer protection is not within the jurisdiction of the Patented Medicine Prices Review Board.