Drug plan lessons from the U.S.

This article was from coverage of the Benefits Canada Face-to-Face: Drug Plan Management Forum, held at the Fairmont Royal York Hotel in Toronto.

Magna International Inc., a global vehicle part manufacturer and assembler with a workforce of 104,000, has a decentralized management structure that allows every division to run as a separate entity, said Arthur Fabbro, the organization’s director of total compensation.

Typically, drug plans in the organization’s U.S. divisions have a three-tier design comprising generic drugs, preferred brands and non-preferred brands.

In Canada, a two-tiered system—formulary and non-formulary drugs—prevails. Mail-order pharmacy, in its infancy in Canada, “plays a huge role in containing costs in U.S. plans.”

According to Fabbro, Canadian drug plan providers might also learn from these common U.S. practices:

adjudicating pharmacy claims;

conducting safety checks and drug utilization reviews;

negotiating preferred price and rebate arrangements with drug manufacturers;

negotiating preferred pricing with retail pharmacies; and

conducting regular reviews to discuss trends, explore and implement plan design strategies, and develop clinical programs.

Future plan design modifications may include out-of-pocket caps, electronic claims submission and automatic generic substitution. “If we could raise generic substitution by just 5%, we could cut major costs,” said Fabbro, who also gave the thumbs-up to clinical and utilization management programs. “These programs hone in on where the costs are hitting our plans,” he said, “and there’s no question they lead to more cost-effective outcomes.”

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