GroupNews – May 2020
Benefit plan management
Ontario issues regulations amending Ontario Drug Benefit Act
The Ontario government has issued two Regulations amending the Ontario Drug Benefit Act.
Regulation 211/20 amends O. Reg. 201/96 with respect to the stockpiling of medications and demand increases for treatments for patients with COVID-19. To protect the supply chain and prevent any drug shortages due to increased demands as a result of COVID-19, as of March 20, 2020, the government recommended dispensing no more than a 30-day supply of medication even if a greater supply may be prescribed and payable under the Ontario Drug Benefit (ODB) program.
As a result of the 30-day supply limit, ODB program recipients are paying more than one co-payment for medication being dispensed in instalments for supplies of over 30 days. To help alleviate costs for patients who regularly receive a supply of medication of more than 30 days, the Ministry of Health has amended
O. Reg 201/96 to ensure recipients only pay one co-payment for medication supplies dispensed in instalments. The government will cover the cost of subsequent co-payments for additional instalments until the Ministry of Health’s supply limit recommendation has ended or until June 30, 2020, whichever occurs first.
Regulation 212/20 amends O. Reg 201/96 regarding relief from Trillium Drug Program deductibles. The amendments extend the in-year deductible reassessment process for households under the Trillium Drug Program (TDP). The government will now allow households to have their deductible reassessed for the 2019–2020 benefit year if their 2020 income is different from their 2018 income by 10% or more, including for reasons relating to COVID-19.
Any reassessed deductible based on 2020 income will apply to the fourth quarter of the current 2019–20 benefit year (from May 1 until July 31, 2020). Deductibles for the 2019–20 benefit year can continue to be reassessed based on 2019 income if that 2019 income is different from the household’s 2018 income by 10% or more.
Existing and new TDP households who want to apply for an in-year reassessment of their deductible due to income changes of at least 10% in either 2019 or in 2020 can complete and submit the Annual Deductible Re-Assessment Form.
Impact: Regulation 211/20 will help reduce unnecessary costs for patients who regularly receive a supply of medication of more than 30 days, and in turn will result in fewer payments from employee benefit plans that cover the co-pays for ODB recipients.
Regulation 212/20 is not expected to create any additional administrative burden for plan sponsors or employers.
Benefit plan management
Drug trend report examines prescription drug spending for 2019
Express Scripts Canada’s Drug Trend Report provides an annual analysis of prescription drug trends in privately sponsored Canadian benefit plans. Total drug spend increased by 1% in 2019, largely driven by a 2.8% rise in specialty drug spend. This overall increase is relatively unchanged from the 2018 increase of 0.9% and significantly lower than the +2.5% adjustment in 2017.
Traditional drugs continue to account for 67% of the 2019 total costs, as they did in 2018. While the cost per prescription of traditional medications rose by 0.4%, this was offset by a continuing decline of 0.3% in traditional drug usage. These adjustments were the result of several factors including the dispensing of higher-cost traditional drugs and the lingering impact of OHIP+ (for those under 25 years of age).
Unchanged from 2018, specialty drugs accounted for 2% of total claims and 33% of the total cost. In contrast to traditional drugs, specialty drug utilization increased by 2.9% in 2019, while the cost per prescription declined slightly by 0.1%. Reasons for these inverse adjustments include respectively an increase in the number of indications for existing drugs and greater prevalence of provincial coverage for biosimilars.
During 2019, four biosimilar drugs were launched in Canada, three of which are used in cancer treatments. There are an additional 15 biosimilars under review which, if approved, could introduce cost competition and savings of 10–30%. Given that 60% of drugs in the pipeline are for specialty drugs, including costly gene therapies, these are important initiatives. Additionally, about half of these new biosimilars are for oral drugs that could further shift the cost of treatment from public to private plans, as they do not need to be administered in a medical environment.
Starting in 2018, Express Scripts Canada began studying the link between lack of medication adherence and poor health outcomes and higher spending. The poorest medication adherence in 2019 was found in claimants coping with diabetes (48%), inflammatory conditions (40%) and depression (38%). Further, they found that 70% of Canadians are not compliant with physicians’ medication instructions while failing to fill up to 26% of all drug prescriptions.
Impact: The sustainability of private plans is a constant and growing concern, despite the life-altering results they allow and the upside from reduced absenteeism and increased productivity. Private benefit plans have and will continue to face significant cost pressures, both from an aging population whose need for prescription medications increases over time and from the continuing influx of specialty drugs and gene therapy for which treatment costs could dwarf that of current biologic drugs. Plan sponsors are encouraged to be open to alternative cost-savings measures and drug management to strike a long-term balance between cost and health outcomes.
Legal and legislative news
Quebec provides relief for employer payroll contributions to the Health Services Fund
The Quebec Minister of Finance is granting certain employers a credit on their employer contributions to the provincial Health Services Fund for employees on paid leave during the COVID-19 pandemic. The announcement made on April 30, 2020, provides a credit to eligible employers that receive the temporary Canada Emergency Wage Subsidy (CEWS) provided under the federal government‘s response to COVID-19.
The CEWS temporary subsidy, which provides employers with an amount equal to 75% of employees’ remuneration paid up to a maximum of $847 per week per employee, is available to qualifying employers that have lost revenue during COVID-19. On April 8, the federal government announced it will provide a 100% refund for employer-paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan.
As announced by the Quebec Minister of Finance on April 30, the Health Services Fund credit, available to certain employers under the CEWS that maintain an establishment in Quebec, will be effective retroactively for the duration of the 12-week CEWS program, from March 15 to June 6, 2020.
The credit amount is equal to the total Health Services Fund contribution made on the salary and wages paid to employees on paid leave. The credit covers only employees who are on paid leave for an entire week during the eligibility period. Employees who work during a given week are excluded, as well as employees who receive no remuneration from the employer for at least 14 consecutive days during the eligibility period. It should also be noted that employers who are only eligible for the 10% Temporary Wage Subsidy, which is a separate program from CEWS, are not eligible for the Health Services Fund credit.
While Finance Minister Bill Morneau announced that the Government of Canada is extending the CEWS by an additional 12 weeks to August 29, 2020, the Quebec government has yet to confirm it will extend the HSF credit to coincide with this extension.
Impact: The HSF credit will be of some relief to employers in Quebec receiving the federal CEWS that have lost revenue due to COVID-19.
Legal and legislative news
Federal government updates details on Canada Emergency Response Benefit
On May 8, 2020, the federal government issued a new question and answer (Q&A) with details on the use of Supplemental Unemployment Benefit (SUB) plans to top up the Canada Emergency Response Benefit (CERB).
The government states in the Q&A that employers will not be entitled to top up the CERB through the use of a SUB plan. The government confirmed that the provisions of the Employment Insurance Regulations (EI) that allow employers to make additional top-up payments to employees in receipt of EI benefits through a SUB plan do not apply to the CERB. Had the federal government not temporarily replaced the EI system with the CERB, employers would have been able to use SUB plans to top up their employees’ EI benefits.
The government noted that employers are still allowed to submit SUB plans in order to make payments to employees who are currently receiving EI or sickness benefits for claims prior to March 15, 2020. In addition, the government stated that a SUB plan can be made available to top up employees who have received 16 weeks of CERB benefits and moved on to regular EI benefits.
Impact: The restriction on SUB plans to top up the income to employees who receive CERB payments will potentially be a financial disadvantage for those employees who otherwise would be able to benefit from their SUB plan. Those who sponsor a SUB plan for members of health and welfare trusts or employee life and health trusts may wish to investigate alternative available options to top-up the CERB payments (within the government’s restrictions).
This publication has been prepared by the GroupNews editorial board for general information and does not constitute professional advice. The information contained herein is based on currently available sources and analysis. The data used may be from third-party sources that Eckler has not independently verified, validated, or audited. They make no representations or warranties with respect to the accuracy of the information, nor whether it is suitable for the purposes to which it is put by users. The information is not intended to be taken as advice with respect to any individual situation and cannot be relied upon as such.
Current editorial board members are: Andrew Tsoi-A-Sue, Ellen Whelan, Charlene Milton, Philippe Laplante, and Nick Gubbay.