Hats off to Green Shield Canada for coining the phrase, the “Impactables”. It is a fitting phrase to describe a segment of the active claiming population that may or may not be consuming costly homeopathy or biologic medications, but who are also using ‘multiple therapeutic medications’ to treat a wide range of traditional chronic ailments. This would include hypertension, high cholesterol and depression just to name a few.
While we continue to brace for what is expected to be an increasingly costly landscape for specialty drugs for the treatment of Rheumatoid and Psoriatic Arthritis, Crohn’s, and Multiple Sclerosis, it is important for plan sponsors to recognise that homeopathy, as well as the traditional drug therapies for chronic conditions, need to be ‘managed’. Management does not imply withholding medications, but exploring less costly alternatives before the use of blockbuster therapies.
To better understand the role of the ‘Impactables’, we will quickly highlight some of the Green Shield Canada 2011 drug study. Data from this study showed that annual health costs rose by between 7.9% in 2008 to 0.2% in 2011.
What is interesting is that plan sponsors who implemented ‘restricted formularies’ saw their annual health costs rise by only 0.9% in 2008 and fall by 4.7% in 2011. Their costs were much reduced.
The key theme in the 2011 drug study was the expiry of a number of blockbuster drugs, an unprecedented growth in the use of biologics and the reluctance of employers to embrace managed formulary solutions and cost containment in general.
Factors influencing today’s drug spend are demographics, plan design, pricing trends, generic penetration rates, biologics and finally other high-cost claimants. Canada’s 65+ population is expected to grow from 14% in 2011 to almost 23% in 2035. While the average annual cost per claimant aged 55 to 64 is nearly $1,300, it is just $360 for those 25 to 34.
Green Shield noted that the use of biologics has grown from 9.4% of overall costs in 2007 to 12.3% in 2011; the use of generics has grown from 46% to 54% over that same time period and where brand name drugs only account for 46% of the overall claims, they account for over 70% of the overall costs. Pharmacy benefit managers speculate that by 2014 biologic drugs will represent up to 23% of overall drug costs.
Green Shield has found that a small percentage of plan members (5%) accounts for a very large proportion of plan costs (43%). In fact, the top 20% of high-cost claimants account for 75% of costs. The old 80/20 rule (nearly!!).
The good news for plan sponsors is that biologics can be ‘managed’. To do so, plan sponsors must ensure that the most cost-effective therapies are tried first, rather than the biologic.
These “Impactable” claimants can be positively influenced by adopting lifestyle changes that promote wellness and effective disease management. Plan sponsors need to keep a keen eye on the growth of biologics, but they also need to stay equally mindful of the “Impactables”. The need for drug management policies that require “first try this, then try that” approach to actively managing biologics is paramount, but employers also need to take a serious look at enhanced generic programs, conditional formularies, step reimbursement levels, (i.e. 90% copay for tier 1 medications, 70% copay for tier 2 drugs), prior authorization programs and biological management programs. The traditional wellness management programs focusing on lifestyle and other health outcomes should be considered, particularly if they can be quantified or benchmarked against specific therapeutic categories to gauge progress.
The “Impactables” represent a golden opportunity to positively influence high-cost plan member’s overall health and in turn an organization’s drug utilization.
Ref: The Revenge of the Impactables – GSC 2011 Drug Study highlights
For over 20 years, Chris Pryce of Human Capital Benefits has been advising employers on all aspects of managing employee benefits programs and related products. If you have any questions, you can contact Chris at 416.924.8280 or by email at email@example.com