This article was from coverage of the Benefits Canada 2011 Face-to-Face: Drug Plan Management Forum, held at the Fairmont Royal York Hotel in Toronto on Dec. 1, 2011.
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.”