A group of 23 Canadian insurance companies has come up with a plan to spread out the expense of high-priced drug treatments – a move they say will shelter Canadians from the risk of losing employer-sponsored coverage due to cost.
The Canadian Life and Health Insurance Association says the insurers are trying to avoid a situation where employers face a sharp jump in premiums due to big claims for extremely expensive drugs.
To do so, the industry is developing a pooled system of coverage that will allow insurers to exclude the cost of certain high-cost drugs when setting premiums charged to employers.
“It is the industry’s view that no Canadian should face the prospect of losing their drug coverage due to rare but very expensive drugs costs,” Frank Swedlove, the association’s president, said Tuesday.
Decisions about whether to cover a particular drug are up to the employers sponsoring the plan but cost is often an important factor in their decisions when deciding the extent of the coverage.
According to the association, certain drug treatments – typically for genetic enzyme disorders, cancer treatments and auto-immune disorders – can cost more than $50,000 per year per patient.
“The ability for insurance companies to pool the costs of very expensive drugs represents a win-win scenario for all participants in fully insured plans,” he added.
“Employers get a more financially sustainable drug plan, employees benefit as they will continue to receive coverage from their employer plans even in the face of a high cost drug claim, and insurers are able to spread the cost of high cost claims amongst the participating companies.”
The association said Tuesday that one-third of companies polled for it recently by Leger Marketing indicated they would drop their drug coverage if premiums jumped by 25% or more.
It says 100% of the carriers that offer supplementary drug coverage have committed to the setting up a joint industry pool that will spread the costs for very large, recurrent prescription drug claims.