The cost of life-saving medicines

By Lori Bamber, Managing Editor

The catastrophic Ebola outbreak in Africa and the ensuing race for a vaccine is an alarming reminder of our dependence on pharmaceutical innovation.

Prescription drugs and vaccines have been a constant presence in our lives for the past several decades, improving health outcomes and expanding life expectancy, so it’s easy to take them for granted. But here at home as well as in the developing world, new pharmaceutical treatments continue to have an immense impact, providing hope in the fight against some of the most devastating diseases we face today.


By the numbers

People in Canada spent

$29.3- billion on prescription drugs in 2013.
72.4% of accepted claims were for generic products.    
41.6% of prescribed drug spending was financed by the public sector,    
34.5% of prescribed drug spending was financed by private insurers, and    
23.9% of prescribed drug spending was financed out-of-pocket.

Canadian Institute for Health Information (CIHI)    



Aaron Aoki, a clinical pharmacist at Express Scripts Canada, points to the human papilloma virus (HPV) vaccine and the development of new treatments for hepatitis C as just two examples of recent breakthroughs with immense potential. While there has been some controversy around the introduction of the HPV vaccine, its clinical impact is inarguable, he stresses. “Not only does the vaccine prevent the HPV infection itself, it prevents cervical cancer – the second most common form of cancer in women worldwide.”

Similarly, hepatitis C has become one of the most serious chronic diseases in the last decade, and until very recently one subgroup of the disease, genotype one, has been “pretty much untreatable,” Mr. Aoki explains.

“It takes more than a decade of research, development and testing to bring a new medication to market, and every aspect of development, including all relevant data, is subject to intense scrutiny by the regulators,” says Russell Williams, president of Canada’s Research-Based Pharmaceuticals (Rx&D). “Naturally, Canadians are concerned with the safety and efficacy of medicines and vaccines. And so are we – patient safety is a priority for our members.”
He adds that there are strict national and international operational standards to guide laboratory studies, clinical development and the manufacture of a medication.

To maintain plan sustainability within this environment, insurers and private plan providers have implemented a wide range of cost management strategies, says Stephen Frank, vice president of policy development and health at the Canadian Life and Health Insurance Association. “Generic substitution is now the default of most plan providers, for example, and insurers are starting to use their buying volume to negotiate better pricing on higher-cost drugs.”

In addition, more employers are moving toward plan management that leverages insurer expertise to help employees access the most effective therapies, he says. Evidence-based step therapies, for example, begin with lower-cost drugs before progressing to more expensive treatments. Case managers may be assigned to members who have been prescribed high-cost specialty medications to ensure they’re benefiting from the treatment, or that more effective alternatives are identified.

He adds that employers and insurers are also beginning to leverage health data to identify individuals who may be more susceptible to chronic disease, and to intervene earlier to assist with prevention.

“Five years ago, none of these strategies were prevalent in the market – it has been a very rapid change in the historical context of benefit plans in Canada,” Mr. Frank says.
The association released a policy paper on prescription drugs in June of 2012 that made 23 policy recommendations on addressing the growing challenges around prescription drug access, he reports. “Canadians should have access to the prescription drugs that they need, and the current system is falling short.

Generic substitution is now the default of most plan providers, and insurers are starting to use their buying volume to negotiate better pricing on higher-cost drugs.

— Stephen Frank is vice president of policy development and health at the Canadian Life and Health Insurance Association

“Our view as an industry is that there are a lot of things we can do when the government and the private payers work together. It’s time to break those silos down and collaborate. It’s in everyone’s interest for the whole system to be sustainable.”


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