6In this addition of I read it so you don’t have to but probably still should is the hbm+ Drug Trends and Strategic Insights report. You know I love a good drug report and hbm+ shares insights to help guide conversations with employers about their employee benefit plan.
Before I get into my recap here’s my top 3 takeaways for those of you who can’t be bothered to read for 8 minutes. And if you click here, I drop my top 10.
Getting into the recap – I took 71 pages down to 6 pages. You can do it! This data is drug costs adjudicated by hbm+
Year over year growth in drug spend has increased 42.8% since 2017 with total drug costs rising from $1.4B to $2.0B that’s B for billion.
Part of this increase is due to the number of claimants increasing from 1.9M to 2.1M. The rest is due to the number of claims per claimant rising to 14.2 in 2021 from 11.9 in 2017 as well as the cost per claim increasing. However, the cost per claim has only increased by 6.25% since 2017 where it was $64. In 2021 it’s $68. For those who want to do that math 2.3 claims x $4 = and extra $9.2 per person.
Specialty drugs make up 0.64% of claims. Pharmacare provinces like BC, Sask and MB are well below average with ON leading the way in spend here.
As per usual, a small number of claimants make up a disproportionately large share of overall spend.
I think we’ll see this small number increase as more higher cost treatments becomes available for regular conditions. Right now, the top 5% of spenders have an average annual claim cost of $10,538. We could see this creep into the top 8% or 10%. The bottom spenders clock in only $466 of annual spend. We’ll see that number creep as well.
Diabetes, in particular had a different dynamic in the two categories; it represented the second-largest share of drug costs in the top 5% claimant group, compared to the tenth-largest share in the top 1% group. This was due to the high prevalence of the disease, paired with an escalating cost of treatment per patient driven by utilization of newer drugs.
I’m breezing over some of the next data sets as it reinforces the data from TELUS Health and Express Scripts. The share of generic drugs could be higher. There’s room for improvement. The top therapeutic classes are RA/Crohn’s, MS, Diabetes, we’re seeing a huge increase in ADHD drugs (for adults). Mental Health drugs are prevalent and Cancer drugs have new treatments enroute. Due to the pandemic, we saw claims for pain meds and infections drop.
An important topic and something that drug usage can give a client good insight to is employee mental health. The report shows that anxiety/depression prevalence rate by age group in 2021 was over 25% across the board for people aged 25-64. A clear indication that proactively providing mental health resource should be top priority. But not only providing them, but also communicating that they are there, what they are for and how employees and their families can access them. Beyond that, creating a psychologically safe workplace and tackling the root cause of mental health issues is important for employers. Burnout, workloads, culture etc. are all under the microscope.
Specialty drug spend growth slowed down a bit compared to previous years, but it’s not time to be complacent. In a 2021 report by the Patented Medicines Price Review Board (PMPRB), 31 late-stage new medicines were identified based on their potential to significantly impact the Canadian health care system, with some of these medicines potentially offering breakthroughs in treating previously unmet needs or having the potential to treat large patient populations - five new medicines are forecasted to reach annual global revenues over $1 billion by 2027.
Biologic drugs are the main contributors within the specialty drug category accounting for 66% of the cost.
But guess what? There’s a way to reduce spend in this category. Biosimilars. Since 2014, more than 29 biosimilar products have been approved and marketed in Canada. Biosimilars present comparable safety and efficacy to their originator products but at a significantly lower cost with many of these drugs costing a fraction of the original biologic drug.
Biosimilar transitioning policy under provincial health care plans have now been launched in British Columbia, Alberta, New Brunswick, Quebec, Northwest Territories, and Nova Scotia. (Sask just announced) These policies have driven biosimilar adoption but due to the timing of implementation, there are dramatic differences in biosimilar penetration across the country, with a strong west-to-east gradient.
Moving away from specialty drugs, the two fastest growing claimant-cost-interval categories in 2021 were the $1,000–$1,999 and the $5,000–$9,999 intervals. Take notice of the 17.1% growth in the $5000-$9999 category. This claim category can have significant impact on plan experience and long-term plan affordability as is it below most pooling thresholds.
Traditional tools, such as prior authorization, continue to be an essential element of drug plan management, but equally important are disease-based case management approaches. In a case management framework, claimants with specific chronic diseases, such as high cholesterol and diabetes, work with a case manager one-to-one to manage all aspects of their disease, including medication adherence, diet, and exercise among others. Ensuring that drugs in these categories are not used for off label conditions is also an area to focus.
I want to highlight two categories in this spend category – migraines and elevated cholesterol.
Migraines: Due to there being 40% more claimants (taking new biologics like Aimovig, Ajovy, Emgality) total migraine drug cost jumped by 53% These drugs fall into the $5000-$9999 drug cost interval.
Elevated Cholesterol: Total drug cost for elevated cholesterol medications grew by 16.5% due to an increase in Praluent and Repatha. This noticeable growth was mainly thanks to greater claimant utilization, which increased by 17% from the previous year.
While the cost to migraine management is high, the benefit can easily outweigh this cost. Employees who suffer from migraine will get their life back. They will be more productive; they will be less absent.
Total costs for claimants in the $1,000–$1,999 cost interval grew by 19% over the past five years due to consistent double-digit claimant growth. Diabetes is the significant cost driver accounting for 57% of the total drug-cost growth in 2021. This increase can be attributed to the greater expenditures for Ozempic, which rose by 67%
It’s important to note that drugs like Ozempic are sometimes used off label (when a doctor prescribes a medication for use that is not approved by health Canada) for weight loss. Employers wanting to limit off label use for this drug category can use prior authorization as a tool.
Enough of looking into the rear-view mirror! Let’s get into the emerging trends
hbm+ has identified the following emerging trends: digital pharmacy. Diabetes, (I’d call this a continuing trend), Obesity, Cystic Fibrosis, and the Drug Pipeline.
Trend #1 Digital Pharmacy - several new digital pharmacy start-ups entered the Canadian marketplace, including PocketPills, Pillway, Mednow, Health Depot, and others. Digital pharmacies rely on the same model of drug distribution as “mail-order” pharmacies, but they elevate the patient experience to a much higher level, including connections through web and mobile applications combined with home delivery of medications.
The number of claims for non-specialty medications obtained through digital pharmacies grew 55.8% in 2021.
Delving a bit deeper into the dynamics of the traditional versus digital pharmacy models reveals some interesting trends:
Caution rant incoming: I need to add some colour here. The disp fee is not the be all end all to lower costing drugs. The dispensing fee makes up just one of many parts of thee and cost of the drug. Some carriers, namely the blues and Sun life have drug look up tools. Here’s the Pacific Blue Cross tool. These tools will tell you the whole cost of your drug at different pharmacies.
I use a digital pharmacy and my drugs actually cost more through the digital pharmacy than they would if I walked down the street to my local brick and mortar pharmacy. And they cost WAY more if I felt brave or wanted a $1.50 hot dog and went to Costco. But I don’t use the digital pharmacy to save money. I use the digital pharmacy because it’s convenient and it saves me time.
I’m telling you this because there are coinsurance incentives out there that drive plan members to use a digital pharmacy in exchange for a higher reimbursement level. I.e., go to brick and mortar pharmacy drugs reimbursed at 80%, go to digital pharmacy and get reimbursed at 90%. Despite a maybe lower dispensing fee, the additional 10% reimbursed could mean that overall drug claims increase, causing rates to increase more than if that program was no in place. Good drug analysis of the top DINs and discussion around the possibility of claims increasing with a program like this is necessary so employers understand the pros and cons. Digital pharmacy is not a miracle cost saver. End rant.
Back to our program.
It is interesting that digital pharmacies are dispensing a larger quantity compared to brick and mortar. This will over time slightly reduce the number of times a drug is dispensed. It could possibly increase drug adherence, or it could increase wastage. ON has the largest concentration of digital pharmacy uptakes, followed by Quebec and BC.
The report goes on to say that maintenance medications for chronic disease are an ideal category for distribution through digital pharmacies given the predictable nature of dispensing, compared to medications used to treat acute conditions which are often required on short notice.
The top disease states among patients utilizing digital pharmacy are:
Onto Diabetes, trend #2
The number of claimants taking diabetes medication has been on the rise for years. That’s why I flagged this as an ongoing trend, vs an emerging trend. An estimated 141,000 claimants were using at least one diabetes medication in 2021,
Diabetes prevalence rate has increased. Overall health expenditures for claimants with diabetes reached $469 million in 2021 with an average claimant cost of approximately $3,321.
I’m typing that again. With an average claimant cost of $3,321. As an employer, if you can prevent even just one employee from developing type 2 diabetes, it will have a significant impact on your drug claim costs. Plus, the costs saved from all the other stuff connected to a person having diabetes.
The effort put into keeping employees healthy is worth it.
The report goes into detail on the spend in different diabetes drug and treatment classes. I will recap only this: While the mainstay of treatment for diabetes remains metformin, there are a variety of new medication classes that have been introduced in the market over the past 10 years. In particular, the SGLT-2 inhibitors and GLP-1 receptor agonists medication classes have risen dramatically in utilization. These drugs cost significantly more than tried and true metformin.
If anyone is curious about the Diabetes Canada guidelines around drugs, prevention, physical activity etc. you can find it here.
Traditionally patients have relied on test strips to monitor blood glucose, but highly convenient continuous glucose monitoring (CGM) and flash glucose monitoring (FGM) devices have been introduced on the market. They are obviously becoming more popular and do come with a heftier price tag.
The average claimant cost of CGM/FGM devices reached nearly $2,000 in 2021, which was more than six times the average test-strip claimant cost. Younger claimants made up a significant portion of the CGM/FGM diabetes claimants – about 40% of the CGM/FGM claimants were less than 45 years old,
Diabetic patients typically suffer from additional comorbidities. In particular, 47% of diabetic claimants’ total health expenditures were for medications to treat non-diabetic conditions. On average, each claimant spent $1,558 on non-diabetic medications.
The cost of diabetes goes beyond drugs. Outside of the top five EHC services, diabetes medication claimants had much higher levels of spending and much higher prevalence rates than non-diabetes medication claimants on lancets, stockings, optometric diagnostic services, and braces. Greater use of these services is likely due to diabetes-related complications.
Trend #3 Obesity.
Obesity is a chronic disease typically characterized by accumulation of excess body fat which can have a negative impact on overall health and quality of life. There is a very strong genetic component to obesity with an estimated 70-80% of body mass index (BMI) determined by genes. About one in four Canadian adults are obese, with a higher prevalence among males than females.
There is widespread misunderstanding of obesity today, with a common belief that it is purely due to lifestyle factors such as diet and lack of exercise. Unfortunately, this misunderstanding translates into how private drug plans consider obesity treatments, and in particular, anti-obesity drug therapies. Historically, these drug therapies were lumped with smoking cessation and infertility, into a category called “lifestyle drugs.” The underlying philosophical assumption has been that these conditions are due to life decisions made by individuals, and as such, the treatments for those conditions should not be reimbursed through benefit plans.
There exists an opportunity to streamline the coverage of these drug therapies to coincide with today’s more modern understanding of obesity.
From a drug therapy perspective, there are four Health Canada approved treatments: Xenical, Saxenda, Contrave, and Wegovy. Notice that Ozempic is not on this list.
Utilization of obesity medications has escalated substantially in recent years, including a 29% increase in claimants in 2021. The average claimant cost is $1800 and women over age 24 make up 81% of the claimant population. There’s a whole lot you can unpack about the impact of society on women in that stat. We won’t go there today.
Again, a lot of societal impact here that you could unpack. In looking at comorbidities among obesity medication claimants, mental health was the condition with the highest prevalence rate. Nearly 45% of the obesity medication claimants also used mental health medications in 2021.
Trend #4 Cystic fibrosis (CF)
CF is a genetic disease that occurs when a child inherits two defective copies of the gene responsible for CF, one from each parent. It is a multi-system disorder that produces a variety of symptoms including persistent cough with productive thick mucus, frequent chest infections, which may include pneumonia, and bowel disturbances among others. Traditionally, CF was treated mainly with supportive therapies, but over the last decade, a number of drug therapies were approved that treat the underlying cause of the disease,
The larger CF population, combined with the $306,000 annual treatment cost invites questions about the affordability and sustainability of private drug plans in light of this and other ultra-high-cost drug therapies. There were a total of 100 claimants that used these CF treatments in 2021 with the total drug cost of $14 million.
Almost there! Trend #5 the Drug Pipeline.
And that’s the recap.
You can download a copy of the report here