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GSC 2011 DRUG STUDY HIGHLIGHTS

GSC 2011 DRUG STUDY HIGHLIGHTS. DRUG SPENDING IN CANADA. = $31.1 BILLION. 16.2% Non prescriptions . 83.8% Prescriptions . DRUG SPENDING IN CANADA. = $26.1Rx BILLION. 54% Private $14 Billion. 46% Public $12.1 Billion. Plan Sponsors Full coverage Employer paid Open Formulary

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GSC 2011 DRUG STUDY HIGHLIGHTS

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  1. GSC 2011 DRUG STUDY HIGHLIGHTS

  2. DRUG SPENDING IN CANADA = $31.1 BILLION 16.2% Non prescriptions 83.8% Prescriptions

  3. DRUG SPENDING IN CANADA = $26.1Rx BILLION 54% Private $14 Billion 46% Public $12.1 Billion

  4. Plan Sponsors • Full coverage • Employer paid • Open Formulary • Unlimited • Tax effective compensation • Plan Members • High perceived value • Willingness for change Sustainability

  5. GSC STORY FROM THE FIELD • Economic downturn • Many plan sponsors made no plan design changes • Manufacturing sector – forced to make changes – an industry in crisis • Data & Benchmarks = informed decisions • How to affect change when change is a necessity

  6. YEAR OVER YEAR COST GROWTH - GSC 0.2% 2011 2009 2008 2011 2010

  7. YEAR OVER YEAR COST GROWTH, MANUFACTURING 2009 2008 2010 2011

  8. STORY FROM THE FIELD • Plan design changes • Long standing claim management practices • Also benefited from… • An aging population leaving the workforce • Provincial drug reform • Generic versions of popular brand drugs

  9. Data is key Emerging Themes Benchmarking Informed decisions Blockbuster patent expiry Growth of Biologics GSC 2011 Drug Study The Impactables Managed Formularies Pricing Trends Generic Penetration Plan Design Changes

  10. GSC 2011 DRUG STUDY • In partnership with IMS Brogan Inc. • All data provided by GSC • July 1, 2010 – June 30, 2011 • Analysis reflects total paid not submitted

  11. INFLUENCERS ON TODAY’S DRUG SPEND • Demographics • Plan design • Current pricing trends • Generic penetration • Biologics • Other high cost claimants

  12. In 2011, over 14% of our Canadian population was 65 and over By 2031, that number could jump to almost 23%

  13. AVERAGE ANNUAL COST PER CLAIMANT BY AGE

  14. MANY benefit plans are still 100% employer paid

  15. ANNUAL CLAIMANT OUT-OF-POCKET Average Paid per Claimant 2006/07 to 2010/11 Non Manufacturing Average Paid per Claimant 2006/07 to 2010/11 Manufacturing

  16. SOME benefit plans are still on an OPEN formulary

  17. MANAGED FORMULARY

  18. MANAGED FORMULARY

  19. Pricing trends… drug reform and Lipitor

  20. PRICING TRENDS 2009 2008 2010 2011

  21. Industry generic penetration rate 46.8% GSC generic penetration rate 54%

  22. GENERIC PENETRATION - GSC Share of Claims 2010/2011 Share of Claims 2006/2007 BENCHMARK 54% 54% 46% 46% GENERICS BRANDS BRANDS GENERICS

  23. INCREASE THE GENERIC PENETRATION RATE • Generic Substitution • Mandatory Generic Substitution • Enhanced Generic Substitution

  24. GSC GENERIC COSTS Share of Costs 2006/2007 Share of Costs 2010/2011 77% 70% 30% 23% BRANDS BRANDS GENERICS GENERICS

  25. HIGH COST CLAIMANTS 5% of claimants account for 43% of costs

  26. THE NEW HIGH COST CLAIMANT biologics account for 21% of costs from high cost claimants

  27. BIOLOGICS ARE NOT NEW

  28. HOW IS A BIOLOGIC DRUG DIFFERENT? VS.

  29. GSC BIOLOGICS SHARE OF TOTAL COST 2008 2010 2011 2007 2009

  30. BIOLOGICSCANBE MANAGED • Biologics management policy is a must • Ensuring the most cost-effective treatment to be eligible first

  31. THE IMPACTABLES • This is the ‘other’, ‘old school’ high cost claimant • What they are taking is eye opening

  32. HIGH COST CLAIMANT

  33. WE SAID IT ONCE, WE’LL SAY IT AGAIN… DATA IS KEY STOP LOOKING AT TOP DRUGS AND START LOOKING AT TOP CATEGORIES OF DRUGS

  34. TOP TEN DINS

  35. TOP CATEGORIES

  36. DISTRIBUTION OF ELIGIBLE PLAN MEMBERS ALL GSC

  37. GOOD HEALTH IS A GOOD START

  38. GOOD HEALTH IS A GOOD START • Over 50% of Canadians are obese • Start with plan members and their families • Understand disease states through data analysis • Inspire behavioural change through targeted health promotion programs • Benefit Insight™ and Passport to Health™

  39. FORECAST

  40. GSC FORECAST • Continuous mild front for 2012-2013 • ‘patent cliff’ • ongoing provincial generic drug pricing reform • Volatility for long-term • biologics

  41. NOTE THE RED LINE 2008 2009 2007 2010 2011

  42. THE FUTURE IS PHARMACY SERVICES • Medication management/reviews • Disease management programs • Smoking cessation programs • Pharmacist opinion

  43. TAKE AWAYS… CLAIM SIZE DEMOGRAPHICS DISPENSING FEES # OF CLAIMS PER CLAIMANT GENERIC PENETRATION PRICING BIOLOGIC MANAGEMENT POLICY MANAGING CHRONIC CONDITIONS WELLNESS PROGRAMS REIMBURSEMENT PLANS

  44. WHAT WE HAVE LEARNED • You can affect the bottom line • Fear that change in plan design will result in employee dissatisfaction • Effective communication will minimize impact • Meaningful data will help you make informed decisions

  45. THANK YOU

  46. QUESTIONS?

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