Catastrophic Drug Insurance: A Public or Private Sector Solution?

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New specialty drugs such as biological drugs are very expensive. It is reported that the average cost for a specialty drug for treating cancer is about $65,000 per year. Some specialty drugs can cost over $300,000 per year. Furthermore, doctors are becoming more familiar with the excellent benefits of specialty drugs and are prescribing two or three at once.

These very large expenditures are causing problems for both private and public sector drug insurance plans because these plans were not designed to pay for these expensive drugs.

The plans can cope with one time charges; however, these drugs are taken on a regular and constant basis. These high recurring cash charges are the problem.

There is no immediate solution for these recurring charges except for catastrophic drug insurance that pools the premium of many millions of participating Canadians.

There is a sense of urgency in the benefits industry for a solution(s). Many have called on government to resolve the problem but government is hesitant to commit to these very large expenditures and wade into a politically complex environment.

Quebec has a catastrophic drug insurance scheme. The province collects premiums of about $1B and the plan costs the province about $2.5B. Only government can sustain these types of losses.

In order to resolve this problem, the insurance industry must establish a very large pool of capital. This type of pooling of capital will be able to absorb these large claims for specialty drugs. If this type of pooling is not available, then no insurance scheme will be sustainable.

Once this pooling has been instituted, it will (hopefully) be widely adopted. The issue for the insurance companies who participate in this pooling ( if Canada’s competition bureau allows this collaboration) will be to differentiate their insurance offerings. These companies will likely differentiate based on the addition of value added services. One such service that could be added to the insurance is ” specialty drug benefit management”.

There is a talking powerpoint at www.rupertcasemanagement.com ( click on services and click on biopharma specialty drug benefit management) for a full explanation of this type of specialized case management service.

The team at Rupert Case Management has been assisting clients requiring specialty drugs for years. These are complex patients living in a very complex healthcare system. To get the best outcomes, the funding for the drugs must be available through catastrophic drug insurance and the patient should be supported/guided/ by a specialty drug case manager.