It is common to read industry articles and blog posts that cite the increase in prescription drug costs, and specifically specialty drugs. A recent industry article indicates that:

• Costs for traditional prescription drugs represent 98% of all claims and 67% of drug costs.
• Specialty drugs represent 2% of all claims and 33% of drug costs.
• It is expected that specialty drugs will increase to 45% of drug costs by the end of 2021.

Articles explain that there are a number of reasons for the increase in specialty drug costs:

• More expensive medications are being used for conditions that were routinely treated by traditional medications, for example, asthma and diabetes.
• Medication for cancer treatment being used outside a hospital.
• The introduction of new medications such as gene therapy and migraines.

It is clear that the cost of specialty drugs has an impact on the cost of Group Benefit Programs. However, what is missing in the conversation about specialty drugs is what you can do to manage the increasing costs in your Group Benefits Plan.

If the industries EP3 pooling (Extended Health Care Policy Protection Plan, established in January 2013) was designed to absorb the cost of high cost drugs claims into an internal industry pool, why are the rates for fully-insured Health/drug benefits continuing to increase substantially year after year?

We just saw a renewal with a 99.7% increase to health rates, due to high cost drugs. EP3 pooling is not helping this group. In fact, there is no disclosure that explains how or when EP3 is being used. Nor are other insurance providers interested in quoting a group with high cost claims in their claims experience. This leaves the client wondering what was the point of providing a benefit they cannot afford when it comes to renewal time.

Also missing from the conversation is members, and how can they afford their out-of-pocket costs when they are prescribed expensive specialty drugs. Studies tell us that when members cannot afford their out-of-pocket costs, they often will not take their medication as prescribed – they will either limit dosages to ‘spread out their medication’ or stop taking them altogether – both approaches mean the member’s health will deteriorate.

At JRP we know that sustainable costs for both employers and their employees are only achievable through progressive plan design and continual governance.

Most Group Benefits plans built by traditional brokers are designed to break. We build Group Benefit plans that are built to last. And as a result, our clients do not have the challenges that other employers do, allowing our clients to focus on running their business without having to worry about the future of their benefits plans.

When you work with JRP, we are your Benefits Advisors 365 days a year and will treat your investment in benefits as if it was our own.