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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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slide2

DRUG SPENDING IN CANADA

=

$31.1 BILLION

16.2%

Non prescriptions

83.8%

Prescriptions

slide3

DRUG SPENDING IN CANADA

=

$26.1Rx BILLION

54% Private

$14 Billion

46% Public

$12.1 Billion

slide4

Plan Sponsors

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

Sustainability

slide5

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
slide6

YEAR OVER YEAR COST GROWTH - GSC

0.2%

2011

2009

2008

2011

2010

slide8

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
slide9

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

slide10

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
slide11

INFLUENCERS ON

TODAY’S

DRUG SPEND

  • Demographics
  • Plan design
  • Current pricing trends
  • Generic penetration
  • Biologics
  • Other high cost claimants
slide12

In 2011, over 14% of our Canadian population was

65 and over

By 2031, that number could jump to almost 23%

slide14

MANY benefit plans

are still 100% employer paid

slide15

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

slide16

SOME benefit plans

are still on an OPEN formulary

slide19

Pricing trends…

drug reform and Lipitor

slide20

PRICING TRENDS

2009

2008

2010

2011

slide21

Industry generic penetration rate

46.8%

GSC generic penetration rate

54%

slide22

GENERIC PENETRATION - GSC

Share of Claims

2010/2011

Share of Claims

2006/2007

BENCHMARK

54%

54%

46%

46%

GENERICS

BRANDS

BRANDS

GENERICS

slide23

INCREASE THE GENERIC PENETRATION RATE

  • Generic Substitution
  • Mandatory Generic Substitution
  • Enhanced Generic Substitution
slide24

GSC GENERIC COSTS

Share of Costs

2006/2007

Share of Costs

2010/2011

77%

70%

30%

23%

BRANDS

BRANDS

GENERICS

GENERICS

slide25

HIGH COST CLAIMANTS

5% of claimants account for

43% of costs

slide26

THE NEW HIGH COST CLAIMANT

biologics account for 21%

of costs from

high cost claimants

slide30

BIOLOGICSCANBE MANAGED

  • Biologics management policy is a must
  • Ensuring the most cost-effective treatment to be eligible first
slide31

THE IMPACTABLES

  • This is the ‘other’, ‘old school’ high cost claimant
  • What they are taking is eye opening
slide33

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

slide38

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™
slide40

GSC FORECAST

  • Continuous mild front for 2012-2013
    • ‘patent cliff’
    • ongoing provincial generic drug pricing reform
  • Volatility for long-term
    • biologics
slide41

NOTE THE RED LINE

2008

2009

2007

2010

2011

slide42

THE FUTURE IS PHARMACY SERVICES

  • Medication management/reviews
  • Disease management programs
  • Smoking cessation programs
  • Pharmacist opinion
slide43

TAKE AWAYS…

CLAIM SIZE

DEMOGRAPHICS

DISPENSING FEES

# OF CLAIMS PER CLAIMANT

GENERIC PENETRATION

PRICING

BIOLOGIC MANAGEMENT POLICY

MANAGING CHRONIC CONDITIONS

WELLNESS PROGRAMS

REIMBURSEMENT PLANS

slide44

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