teresa negrich director, group product development
TRANSCRIPT
Teresa NegrichDirector, Group Product Development
The healthcare landscape is changing ….. The healthcare landscape is changing ….. rapidlyrapidly
Drug plans Hospitals andPrivate clinics
Eligible prescribers
Health andWellness
Today’s TopicsToday’s TopicsOverview of Canadian Healthcare System
Coverage of Cancer Drugs
Provincial Pricing
Provincial Drug Tendering
Sustainability Principle
Generic drug pricing
Other trends
Overview of the HealthcareOverview of the Healthcare
System In CanadaSystem In Canada
Canada Health Insurance SystemCanada Health Insurance System
Federal legislation
Comprised of 13 interlocking provincial and territorial health insurance plans
Designed to ensure
- Reasonable access to “medically necessary” hospital and physician services- On a prepaid basis and- Without direct charges at the point of service
“to protect, promote and restore the physical and mental
well-being of residents of Canada and to facilitate reasonable
access to health services without financial or other barriers.”
Canada Health ActCanada Health Act
Defines the requirements that the provinces must fulfill in order to receive their full transfer payment under the Canada Health Act
- Public administration
- Comprehensiveness
- Universality
- Accessibility
- Portability
- No extra billing and user charges for insured services
- Reporting requirements to Minister of Health
Canada Health Act – Key DefinitionsCanada Health Act – Key Definitions
Insured health services- Medically necessary hospital, physician and surgical-dental services
Insured hospital services- Medically necessary in and outpatient services such as
• Accommodation and meals at ward level• Nursing services; laboratory, radio-logical and other diagnostic procedures• Drugs, biologicals and related preparations when administered in the hospital• Use of operating rooms, anesthetic facilities including equipment and supplies
Insured physician services- Medically required services rendered by medical practitioners- These are generally determined by physicians in conjunction with their
provincial health insurance plan
“Medically necessary” is not defined in the Canada Health Act
Canada Health Act Canada Health Act
Many provinces offer programs and services which fall outside of the Canada Health Act’s definition of insured health services i.e. Pharmacare, disease focused programs
Provincial governments have jurisdiction over administration and delivery of health care services in their provinces
- Can determine their own priorities- Determine their health care budget- Manage their own resources
The federal government sets out criteria that the provinces must satisfy in order to receive a full transfer payment for healthcare
Cancer DrugsCancer Drugs
““Tell me your postal code, and I will tell Tell me your postal code, and I will tell you your chances of surviving cancer,” you your chances of surviving cancer,” says Dr. William Hryniuk, past chair of the Cancer Advocacy Coalition of Canada.
Coverage of Cancer Drugs – Ontario 2006Coverage of Cancer Drugs – Ontario 2006Ontario working group - proposed that Ontario hospitals could administer some new IV oncology drugs on an outpatient basis
- However, the drug will NOT be an insured service
- Hospitals may charge an administrative fee for administering the drug
Why?
- To stop people from traveling to the U.S. to purchase these drugs at a much higher price
Not provincial policy yet
Does this violate the Canada Health Act? Is this service medically necessary?
Legal opinion obtained the working group supported this recommendation
- It appears as though a province can carve out (not insure) any service they want on an outpatient basis
Public policy decision that the Federal Government must address, but hasn’t
Source CACC report Card 2007
How do the provinces compare?How do the provinces compare?
Source CACC report Card 2007
Private Clinics – The New Healthcare RealityPrivate Clinics – The New Healthcare Reality18 private clinics in Canada make these drugs available to individuals
- 11 clinics recently opened across Canada
- They are funded by Roche Pharmaceuticals
- They administer more than just oncology or Roche drugs
Who will pay for these drugs?Who will pay for these drugs?
Private healthcare plans
If no private coverage
- Exhaust individual savings
- Cash out RRSPs
- Second mortgage your home
- Credit cards
This is a great opportunity for group Critical Illness
Pharmaceutical FocusPharmaceutical FocusDrug Name Estimted Annual Cost Source: Drug Manufacturer
Leukemia + Non-Hodgkin’s LymphomaFludara $8,000 Bayer Inc.Rituxan $41,000 Hoffmann-LaRoche LimitedMabcampath $28,000 Genzyme CorporationGleevec $60,000 Novartis P harmaceuticals Canada Inc.Breast CancerHerceptin $45,000 Hoffmann-LaRoche LimitedTaxotere $30,000 to $40,000 Sanofi-Aventis Canada Inc.Lung CancerIressa $16,000 Astrazeneca Canada Inc.Tarceva $15,000 Hoffmann-LaRoche LimitedTaxotere $30,000 to $40,000 Sanofi-Aventis Canada Inc.Alimta $60,000 Eli Lilly Canada Inc.Colorectal CancerAvastin $52,000 Hoffmann-LaRoche LimitedErbitux $130,000 Bristol-Myers Squibb CompanyCamptosar $100,000 to $150,000 P fizer Canada Inc.Ovarian + P rostate CancerTaxotere $30,000 to $40,000 Sanofi-Aventis Canada Inc.Head + Neck CancerTaxotere $30,000 to $40,000 Sanofi-Aventis Canada Inc.Erbitux $130,000 Bristol-Myers Squibb CompanyMultiple MyelomaVelcade $57,000 J anssen-Ortho Inc.Kidney CancerNexavar $33,000 Bayer Inc.Thyroid CancerThyrogen $1,500 Genzyme Canada Inc.
Pharmaceutical FocusPharmaceutical Focus
The focus is on cancer drugs and drugs to treat rare conditions
• It is estimated that there are 483 drugs in the pipeline- 25% are for cancer
- 18% are for specialty conditions
Private clinics will ensure that the drugs get covered by private payers
Movement to oral medications rather than intravenous ensures that the treatment does not have to be administered in a hospital and will be covered under private plans
The Rise of Catastrophic Claims – Drug Card OnlyThe Rise of Catastrophic Claims – Drug Card Only
Total # of People Covered
$10,000 to $14,999
$15,000 to $24,999
Over $25,000
Year % of Total Covered Who Have Incurred A Claim
2000 4.0M (1,1413) .03% (1,029) .03% (153) .01%
2001 4.4M .05% .03% .01%
2002 4.7M .05% .05% .01%
2003 4.9M .07% .05% .02%
2004 5.1M .08% .07% .03%
2005 6.0M .08% .08% .03%
2006 6.0M (5,551) .09% (5,611) .09% (1,906) .03%
Source: Emergis 2007 Data
Provincial PricingProvincial Pricing
Provincial Pricing – Ontario Bill 102Provincial Pricing – Ontario Bill 102
Bill 102 limited the amount that the ON government will pay for drugs for ODB plan recipients
Pricing applies to the public plan only
Changes
Pharmacy markup - reduced from 10% to 8% on all drugs (brand and generic).
Generic drugs - capped at 50% of the equivalent brand
Rebates have been reduced and replaced by professional allowances
This has impacted pharmacy revenue
Components of a RxComponents of a Rx
Rx = Markup
Dispensing Fee
+
IngredientCost
Bill 102 reduced from
10% to 8%
Components of Pharmacy RevenueComponents of Pharmacy Revenue
Other Other Merchandise Merchandise
SalesSales
Generic Generic RebatesRebates
PrescriptionPrescriptionDrugDrug Sales Sales
OtherOther
Pharmacy markup reduced
Generic rebates reduced
Impact of Ontario Bill 102 Impact of Ontario Bill 102
The principle of rebating was exposed
Dispense fees in Ontario increased by 20% immediately
Extra billing is occurring in some pharmacies on the drug card
Cash paying customers are funding a portion of the lost pharmacy revenue
Bill 102 created three tiered pricing
- One price for ODB recipients
- Another price for drug cards
- A third price for cash paying customers
Provincial Pricing Provincial Pricing Quebec
- First province to follow Ontario’s lead
- Maximum price structure to be implemented over 3 years• Generic drug prices capped • Maximum profit margin capped for the wholesaler
- This pricing structure applies to private plans
Newfoundland- Will follow Ontario’s pricing structure - effective Feb. 1, 2009- Pushed back new pricing structure due in February 2008
due to negative pharmacy reaction
Nova Scotia• Tariffs introduced on “Top 20” drugs
Provincial Drug TenderingProvincial Drug Tendering
Provincial Drug TenderingProvincial Drug TenderingProvince of BC negotiated a drug deal for Zyprexa
- Speculated that 10-15 more deals are in the works
Province of Alberta
- AB has announced that they will be establishing a bulk buy policy
Province of Ontario
- Tendering certain off-patent drugs where multiple generics exist
- First Wave: high blood pressure, gastrointestinal, diabetes, epilepsy and pain disorders
Impact of Provincial TenderingImpact of Provincial Tendering
Provinces are legislating on behalf of the public sector and ignoring the private sector
A two-tiered pricing system exists
- One price for pharmaceuticals purchased by the government
- A second higher price for the private sector and uninsured
Sustainability PrincipleSustainability Principle
Provinces Add Sustainability PrincipleProvinces Add Sustainability Principle
British Columbia
Province of BC added a sixth principle to Medicare Protection Act (April 2008)
- SUSTAINABILITY – The Medical Services Plan will be administered in a manner that is fiscally sustainable and provides for current healthcare needs without compromising the public health care system for future generations.
Alberta
Announced an aggressive action plan to improve efficiencies and the sustainability of their healthcare plan
Generic Drug PricingGeneric Drug Pricing
Generic Drug Pricing – is there cause for concern?Generic Drug Pricing – is there cause for concern?
Reasons For Competition Bureau Investigation- Concern over the high cost of generic drug prices in Canada
• Cost out of sync with other 10 out of 11 comparator countries
• Cost 32% higher than other countries
Findings
- Rebates are between 40 – 80%
- Lots of competition between manufacturers and suppliers BUT rebates are NOT passed along to the private sector
- This has created on over-inflated price
Mental HealthMental Health
“there can be no health without mental health”
Cubic Health Study Found
Employees with depression
- Drug claims were 2.5 times greater than employees who do not suffer from depression
Many co-morbidity conditions accompany depression
- Neurotic pain, anxiety disorders, sleep disorders, stomach hyperacidity and mild to moderate pain.
Centre for Mental Health in the WorkplaceCentre for Mental Health in the Workplace
*Cubic Health study was based on 2004 and 2005 Great-West Life data
*Cubic Health Study: based on 2005 data from Great-West Life
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Amount Paid ($) Per Claimant
All Claimants Claimants with Depression Claimants without Depression
The impact of depression in the workplaceThe impact of depression in the workplace
*Cubic Health Study: based on 2005 data from Great-West Life
0%
10%
20%
30%
40%
50%
60%
70%
Percent of Amount Paid for Claimants with Depresson
1 - Neurological Pain
2 - Anxiety Disorder
3 - Sleep Disorder
4 - Mild-Moderate Pain
5 - Stomach Hyperacidity
6 - Inflamation, Muscle / Bone
7 - Asthma / COPD
8 - Infection, General Bacteria
9 - Blood Pressure
10 - Elevated Cholesterol
Co-morbidities of depressionCo-morbidities of depression
Other Provincial TrendsOther Provincial Trends
PrivatizationPrivatizationGovernments are entertaining the value that the private industry brings to their budget concerns
Private medical clinics and online doctor services are quickly gaining momentum in many provinces
Quebec just introduced a bill that, if passed, could allow doctors to practice in both the public and private sector
Former Quebec Minister of Health, Philippe Couillard, has joined a private sector company only two months after retiring from politics• He is now a partner of PCP Healthcare Opportunities Fund which invests in private
healthcare businesses with the overall goal to improve healthcare system efficiencies
U.S. company launches a NAFTA-based lawsuit threatening Medicare
Alternative Healthcare ProfessionalsAlternative Healthcare Professionals
Pharmacists and nurse practitioners are being granted the right to prescribe and/or provide expanded services in many provinces
This is a positive change which will take some strain off physicians and increase compliance and health outcomes
Provinces Focus On Wellness
• Manitoba - Workplace In Motion – grants available to promote activity in workplaces
• Alberta - looking at disease management
• Ontario – The 2008 proposed $190M (over 3 years) to implement a chronic disease prevention and management strategy. Diabetes will be focused on first.
Provinces Ban on Mandatory Retirement• ON, BC, SK, NS and NF have put in place laws for provincially regulated employers
- can no longer force employees to retire solely because they have reached age 65 or more.
Provinces set to Create Electronic Medical Record• Each province is looking to capture medical information electronically so that all
healthcare providers have up to date relevant information
Other TrendsOther Trends
Medical Tourism - Sun, Sand and SurgeryMedical Tourism - Sun, Sand and Surgery
Sicko (Michael Moore) depicts the Cuban health care system superior to the U.S.
Entrepreneurial companies are providing a service of arranging trips to other countries for medical treatment and diagnostic tests
It is estimated that as many as 30,000 Canadians travel each year for medical and dental procedures
HPV VaccinationHPV Vaccination
Gardasil protects against high risk HPV types 6, 11, 16 and 18
Recommended for women ages 9 to 26
The Federal Government has provided $300M in funding to the provinces
Some provinces began vaccinations in the 2007 school year
Approximate cost $400 - $600 total (for 3 doses)
Impact on Private PlansImpact on Private Plans
As of July 2007, 37% of all vaccinations at GWL were for Gardasil*
- At July 2008, 22% were for Gardasil vaccinations (* GWL 2007 drug data)
A new HPV vaccination made by Glaxco Smith Klein is due to come into the market soon. This will increase media attention.
Gardasil is being fast tracked for women age 27 to 42 in the U.S.
- Only a matter of time before it is expanded in Canada
Paramedical TrendsParamedical Trends
The number of plan members using paramedical services is increasing and the number of services that they claim is also on the rise
“Blackberry thumb” is predicted to be the new upcoming problem
Despite increasing utilization, paramedical services should form part of every benefits plan
- Focus on health and wellness- Can improve physical and mental health- May prevent more serious long term illness
Paramedical Claims – % of healthcareParamedical Claims – % of healthcare
1999 2000 2001 2002 2003 2004 2005 2006
Massage 2.05 2.38 2.77 3.15 3.53 3.82 3.99 4.04
Physio 3.79 3.72 3.71 3.72 3.66 3.52 3.39 3.30
Chiro 2.86 2.66 2.61 2.53 2.61 2.69 3.58 3.68
Psych 1.62 1.57 1.54 1.47 1.43 1.36 1.26 1.24
Other 1.37 1.37 1.46 1.58 1.78 1.95 2.02 2.09
Total 11.69 11.70 12.09 12.44 13.00 13.34 14.25 14.36
Source: GWL data
Thank youThank you