Worried about high drug prices? Formularies offer options
May 20, 2022
For business owners, plan administrators, and sponsors
If you sometimes worry about your group benefits plan, you might take some comfort in the fact that you’re not alone. In the Benefits Canada 2021 Healthcare survey, 68% of plan sponsors reported having at least one major concern about their plan. And the top concern? The sustainability of the drug plan (39%)1.
It’s understandable. The Canadian Journal of Health Technologies released a report that showed that total prescription drug purchases in Canada in 2020 reached $32.7 billion, an increase of 4.3% from the previous year. Additionally, over the past 20 years this spending has grown at an average annual rate of 6%, three times the average inflation rate2.
At the same time, the importance of a drug plan can’t be overstated. Twenty-one per cent of all plan members report that they use three or more medications on a regular basis. That number jumps much higher (47%) when looking at plan members who report being in poor health1.
Fortunately, there are a variety of ways to influence positive plan member behaviours when it comes to their drug plans. Co-payments and deductibles help keep the plan member involved in the purchase. Plans can be designed to encourage the use of lower-cost generic drugs first. Limits can be applied to dispensing fees. And a managed formulary can give you an added level of control.
Does your group plan have a managed formulary?
A managed formulary is a great way for companies to help manage the cost of their plans. A formulary is a defined list of clinically effective prescription drugs that are used in the treatment of most medical conditions.
It’s not about denying or restricting access to drugs, it’s about managing the long-term sustainability of a plan by offering drugs based on a set of criteria. The three main criteria are efficacy, safety, and cost-effectiveness. However, it’s important to understand that a managed formulary is about more than just cost, it’s about taking all these factors into consideration when selecting the drugs to put on a formulary.
If a plan member is prescribed a drug that’s not on your list, a suitable alternative can usually be found within the formulary that offers similar, equally effective results and is available at a lower cost.
Managing the formulary
Manulife’s team of clinical experts continuously reviews the formulary to reflect the changing needs of your members. Your members get the treatment they need at a cost that helps you better manage your plan.
Curious? Ask your Manulife representative if a managed formulary is a good fit for your plan.
In the works: a new Optimized Drug Formulary
We understand that you want to support member wellness while reducing unnecessary spending. That’s why we’re planning to introduce a new way to help ensure members have access to the medications they need in a sustainable way for group plans. With our new Optimized Drug Formulary, we’ll be combining four of our most effective cost containment features in one product – so organizations can help ensure all their members get effective drug coverage without sacrificing health options.
- Managed Formulary (with or without Vaccines): Gives members access to the cost-effective medications that are essential to their care.
- Mandatory Generic Pricing: Optimizes generic pricing by only allowing up to the cost of the generic product for Multisource brand drugs.
- Maximum Allowable Cost: Limits coverage of expensive medications in a therapy category (that do not offer any additional health benefit) to the price of the most cost effective drug in that category.
- Limited Number of Dispensing Fees: Maximizes the savings on dispensing fees by ensuring medications are dispensed in 3-month intervals when clinically appropriate by limiting fee coverage to 6 fees per year for maintenance drugs.
Watch for more details about Manulife’s new Optimized Drug Formulary – coming early in 2023.