Teresa Negrich Director, Group Product Development

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Teresa NegrichDirector, Group Product Development
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• The healthcare landscape is changing .. rapidly

Drug plans
Hospitals and Private clinics
Eligible prescribers
Health and Wellness
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Todays Topics

• Overview of Canadian Healthcare System
• Coverage of Cancer Drugs
• Provincial Pricing
• Provincial Drug Tendering
• Sustainability Principle
• Generic drug pricing
• Other trends

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• Overview of the Healthcare
• System In Canada

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Canada 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.

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Canada 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

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Canada 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

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Canada Health Act

• Many provinces offer programs and services which
  fall outside of the Canada Health Acts
  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

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• Cancer Drugs

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• Tell me your postal code, and I will tell you
  your chances of surviving cancer,
• says Dr. William Hryniuk, past chair of the
  Cancer Advocacy Coalition of Canada.

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Coverage of Cancer Drugs Ontario 2006

• Ontario 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 hasnt

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How do the provinces compare?
Source CACC report Card 2007
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Source CACC report Card 2007
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Private Clinics The New Healthcare Reality

• 18 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

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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

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Pharmaceutical Focus
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Pharmaceutical 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

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The Rise of Catastrophic Claims Drug Card Only
Source Emergis 2007 Data
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• Provincial Pricing

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Provincial 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

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Components of a Rx
Markup
IngredientCost
Rx
Bill 102 reduced from 10 to 8

Dispensing Fee
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Components of Pharmacy Revenue
Other Merchandise Sales
Generic Rebates
PrescriptionDrug Sales
Other
Pharmacy markup reduced
Generic rebates reduced
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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

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Provincial Pricing

• Quebec
• - First province to follow Ontarios 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 Ontarios 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

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• Provincial Drug Tendering

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Provincial Drug Tendering

• Province 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

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Impact 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

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• Sustainability Principle

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Provinces 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

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• Generic Drug Pricing

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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

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• Mental Health
• there can be no health without mental health

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Centre for Mental Health in the Workplace

• 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.

Cubic Health study was based on 2004 and 2005
Great-West Life data
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The impact of depression in the workplace
Cubic Health Study based on 2005 data from
Great-West Life
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Co-morbidities of depression
Cubic Health Study based on 2005 data from
Great-West Life
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Other Provincial Trends

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Privatization

• Governments 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

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Alternative 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

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• 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

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Other Trends

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Medical 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

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HPV 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)

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Impact 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

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Paramedical 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

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Paramedical Claims of healthcare
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• Thank you