The Impact of Biologics on Plan Costs

Biologic drugs have been around for some time, e.g. insulin has been used to control diabetes since the early 20th century. However, one class of biologic drugs has started to dominate drug benefit costs.

The key difference between traditional medications and biologics is how they are manufactured. The former are chemically synthesized and the process is easily replicated. The latter are derived from living cells, tissue or micro-organisms requiring more complex manufacturing processes that are unique to each drug.

The one class of biologics that has become dominate in drug plans includes a number of products used to treat rheumatoid arthritis (RA), juvenile RA, Crohn’s disease, psoriasis and cancer among others. The number of drugs on the market has grown significantly over the last 10 years.

The Green Shield Canada 2010 Drug Trends Survey analyzed more than 56 million drug claims between 2005 and 2010 and included some findings related to biologics, including:

• The compounded annual growth of biologics from 2005 to 2010 was 12.1%
• Biologics account for 50% of the high cost claimants
• The age group 35 to 44 year olds had the highest annual growth in costs (3.4%) due to biologics

The plan sponsor is once again caught between providing benefits that are adequate for their employees and affordable for their business. There are steps that can be taken to ensure these costs are manageable, including:

• Ensure biologics require the attending physician to complete a pre-determination questionnaire to ensure other recognized treatments have been exhausted
• Ensure the drug benefit uses the most cost effective biologic treatment (there are subsequent entry biologics that have lower pricing)
• Exhaust all coverage available through Provincial Medical plans

The fact is biologics can be effective in getting people back to work and keeping them there. By establishing some guidelines within the drug benefit for the use of biologics, the plan sponsor can ensure their members get the right drug at the best price.

For more information visit www.benefitscanada.ca July/August edition article titled On The Radar

Managing Episodic Disabilities

An episodic disability, whether physical or mental in nature, is marked by unpredictable periods and degrees of wellness. Simply stated, the person doesn’t know when they are going to be ill or for how long. Examples include arthritis. Multiple Sclerosis, HIV and mental illnesses).

Some hints for the employer in managing these claims include:

• Be prepared to offer flexible work arrangements to allow for Doctor visits and even rest periods
• Provide, if possible, part-time hours with pro-rated benefits
• Maintain regular contact with the employee asking them if there is anything you can do to help
• Ensure the employee knows the process for requesting an accommodation (who to ask ? Their number of sick days, )
• Refer the employee to resources outside the workplace like an employee assistance plan and the Employee Disabilities Employment Network
• Inform all employees on the company policies on disabilities and accommodation including their responsibility for providing notice, medical information and participation in any return-to-work initiatives

A well designed program can keep employees at work rather than going on disability benefits.

For more information click here

Salaries to Increase

Employers project base salary budgets will increase by 3.1% for next year according to Mercer’s 2012 Compensation Planning Survey. This is a slight improvement over the 2011 projected increase of 2.9% but, with an inflation rate projects at 2.6%, working Canadians will not be much further ahead.

For more information, visit www.imercer.ca

Ontario Court Decision on Severance Costly for Employers

A ruling by the Ontario Superior Court of Justice in Brito v. Canac Kitchens states the employer must “make the employee whole” after terminating their employment in every respect, not just salary. That can mean disability benefits too, even after the employee starts a new job.

In this case, the individual was terminated and subsequently started a new job with lower salary and no disability benefits. The individual was diagnosed with cancer 16 months after being terminated. The court ruled the former employer was responsible for maintaining all benefits through the notice period, which the court felt should e 22 months. As a result, the court awarded the employee long term disability benefits through the former employer.

What is different about this decision is that the employer’s obligation may not end when the terminated employee starts another job. This currently only applies in Ontario but could also influence decisions in other parts of our country.

For more information, visit www.fasken.com