What’s top of mind when we present our benefit solutions? Drug coverage. Whether it’s how drugs are covered under Blendable benefits, or what other options exist to help with costs, drug questions are always part of the conversation.

And you know what, we love getting them!

It gives us a chance to shed some light on the bigger picture: what is the best way to help reduce the out-of-pocket cost of drugs?

How are drugs paid for?

The simplest answer? Out of your own pocket. Pretty obvious right? If you need medication, you pay for it. End of story. 

However, there are different ways you can get reimbursed for the cost of medications. Two typical ways are through a government program or your group benefits plan.

Both government drug programs and group benefits drug plans have limitations on what kind of drugs they will pay for, and how much they will pay. This is defined through a formulary.

Drug formularies

So, what’s a formulary? Let’s make it super simple: formulary = list. That’s all there is to it. Formularies are lists of drugs that are included in the coverage. 

How the provider defines that formulary is the tricky part.

There are lots of criteria that can be used to decide which drugs make the cut and which don’t. It could be as simple as whether the drug is approved for use in Canada, or as complex as a cost-benefit analysis - whether the drug delivers better results for the cost than the alternatives.

Some drug plans have multiple formularies. They might provide 80% coverage for drugs on one list, but only 50% coverage for drugs on another. Or they might require special authorization (read: way too much paperwork) from a physician before covering a particular drug.

The key here is that someone is making decisions about which drugs are included for coverage in the formulary, and why.

The sticky situation

What this means for Plan Sponsors is that they need to decide which formulary to use (which drugs to cover) for their team.

If Plan Sponsors are going to be paying for the cost of drug claims (like in an insured or self-insured drug plan) then they need to balance cost control for the business and the kind of support, they want to give Plan Members. This leads to tricky questions about what your role is as a Plan Sponsor.

• What do you think is the most valuable drug coverage? 
• Are there some drugs you don’t want to cover?
• What’s the risk a high-cost claim will sink your business?

We don’t envy any Plan Sponsor in the hot seat making those tough calls!

It all begs the question, “Why are Plan Sponsors choosing which drugs are right or wrong for their members, and who are they relying on to decide what the most effective treatments are?” 

Take the weight off your shoulders

One way to address this sticky situation is to contribute to a benefits plan and let your Plan Members make the decision about which medications to use. After all, they’re the ones who know their situation the best! They understand the impact of illness on their own life and are consulting with their physician about appropriate treatment.

It seems like a stretch that a Plan Sponsor, advisor, or insurer should be the one saying, “This medication isn’t right for you. We aren’t going to cover it.”

By setting up a Health Spending Account or self-insured plan where the only limitation is dollars available, you’re showing you trust your Plan Members to make the right decision for their own health and wellbeing.

Take the risk away from your business

It’s common to think that a company drug plan is the be-all-end-all. But we’re here to shed some light on solutions that provide support for individuals while taking the risk of paying high drug costs off your business.

Provincial governments offer support for households that spend a large portion of their income on drugs. These programs cover a wide range of prescription and limited-use drugs, as well as some nutritional products and diabetic testing.

By trusting these programs to take care of some drug costs you shift the risk off of the business and onto the government – spreading it across a much broader pool of people. In the end, your team is provided with the coverage they’d need, and you are back in control of your costs.

To wrap things up

We understand that flashing a drug card at the pharmacy feels like a quick win for plan members. However, hidden behind that card are huge downsides for plan members and plan sponsors.

Plan members get their coverage dictated – someone else is making decisions about what the right treatment is, and how much should be paid for.

Plan sponsors are at risk of high drug costs – unless you tighten the purse strings and severely limit the type of medication you’re covering. But then, why bother with drug coverage at all?

That’s why we hope to shed light on different sustainable alternatives that provide your team with what they need and shift the risk off your business! 

We know a ton of questions come along when talking drug coverage, so give our growth team a shout! We’d love to talk. 

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