Report of the Advisory Committee on Health Benefits: An Insurance Plan for Prescription Drugs for Uninsured New Brunswickers Prepared for ESIC Board of Directors Final Report December 2012 Final Report (December 2012) 2 Table of Contents Foreword .....................................................................................................................................6 Acknowledgements .....................................................................................................................7 Executive Summary ....................................................................................................................8 1 Introduction ............................................................................................................................1 4 1.1 Mandate of the Advisory Committee on Health Benefits ..................................................14 1.2 Advisory Committee Process and Approach....................................................................15 2 Development Process ............................................................................................................ 16 2.1 Background .....................................................................................................................16 2.2 Current Situation in New Brunswick ................................................................................18 2.3 Overview of Provincial Drug Plans ..................................................................................24 2.4 Critical Success Factors ..................................................................................................28 3 Summary of Consultations ..................................................................................................... 30 3.1 Consultation Approach ....................................................................................................30 3.2 Stakeholders Views on Important Questions ...................................................................32 3.3 Proposed Concepts for the Insurance Plan for Prescription Drugs ..................................36 4 New Insurance Plan for Prescription Drugs ............................................................................37 4.1 Framework of the Insurance Plan for Prescription Drugs .................................................37 4.2 Proposed Options for Government to Consider ...............................................................48 5 Conclusion .............................................................................................................................5 0 5.1 Benefits of a New Insurance Plan for Prescription Drugs.................................................50 5.2 Additional Observations ..................................................................................................51 Appendices: Appendix A - Overview of Drug Coverage in Canada .............................................................. A-1 Appendix B - Demographics of the Uninsured Population ....................................................... B-1 Appendix C - Details of Provincial Public Drug Plans .............................................................. C-1 Appendix D - Market Basket Measures ................................................................................... D-1 Appendix E - Subsidy Levels for Different Family Sizes .......................................................... E-1 Appendix F - Examples of Payments at the Pharmacy ............................................................ F-1 Appendix G - Additional Observations .....................................................................................G -1 Appendix H - Glossary ............................................................................................................ H-1 References ............................................................................................................................. R-1 Final Report (December 2012) 3 List of Figures Figure 1 - Drug Plan Framework ...............................................................................................11 Figure 2 - Drug Coverage in New Brunswick .............................................................................18 Figure 3 - NBPDP Expenditures and Beneficiaries ....................................................................19 Figure 4 - What a Sample Family Would Pay at the Pharmacy .................................................25 Figure 5 - How Costs are Currently Shared ...............................................................................37 Figure 6 - Average Costs Paid at the Pharmacy per Family without Insurance..........................38 Figure 7 - Average Costs Paid at the Pharmacy per Family before (without Insurance) and after (with the new Insurance Plan) ...................................................................................................39 Figure A.1 - CIHI Total Health Expenditures ........................................................................... A-4 Figure A.2 - CIHI Total Drug Expenditure per Capita............................................................... A-5 Figure B.1 - Insurance Coverage by Income Range ................................................................... 1 Figure B.2 - Families without Coverage by Income Level and Family Size ................................. 2 Figure B.3 - Drug Coverage by Age Group ................................................................................ 3 Figure B.4 - Drug Coverage by Main Income Source ................................................................. 4 Figure B.5 - Drug Coverage by Employment Type ..................................................................... 5 Figure B.6 - Drug Coverage by Perceived Health Status ............................................................ 6 Figure E.1 - Subsidy by Income for a Single Individual ............................................................ E-1 Figure E.2 - Subsidy by Income for a Family of Four ............................................................... E-2 Figure F.1 - Family Example #1 .............................................................................................. F-1 Figure F.2 - Family Example #2 .............................................................................................. F-2 Figure F.3 - Family Example #3 .............................................................................................. F-3 Figure F.4 - Family Example #4 .............................................................................................. F-4 Figure F.5 - Family Example #5 .............................................................................................. F-5 Final Report (December 2012) 4 List of Tables Table 1 - Insurance Plan Design Elements ...............................................................................12 Table 2 - Preliminary Drug Plan Design Elements .....................................................................32 Table C.1 - NL Access Plan Deductible and Copayment ............................................................ 2 Table C.2 - NL Access Plan Examples of Copayment Percentages ........................................... 3 Table C.3 - NL Assurance Plan Eligibility and Copayment ......................................................... 4 Table C.4 - Summary of Committee's Observations for NL Plans .............................................. 4 Table C.5 - Summary of Committee's Observations for PEI Plans ............................................. 6 Table C.6 - NS Family Pharmacare Deductible and Copayment ................................................ 7 Table C.7 - NS Family Pharmacare Deductible .......................................................................... 8 Table C.8 - NS Family Pharmacare Copayment ......................................................................... 8 Table C.9 - NS Seniors' Pharmacare Premium .......................................................................... 9 Table C.10 - Summary of Committee's Observations for NS Plans ............................................ 9 Table C.11 - QC Insurance Plan Premium ................................................................................11 Table C.12 - QC Insurance Plan Deductible, Copayment, and Maximum Contribution..............12 Table C.13 - Summary of Committee's Observations for QC Insurance Plan ............................13 Table C.14 - Summary of Committee's Observations for the ON Plan .......................................15 Table C.15 - MB Pharmacare Deductible ..................................................................................17 Table C.16 - Summary of Committee's Observations for MB Plan ............................................17 Table C.17 - Summary of Committee's Observations for SK Plan .............................................19 Table C.18 - AB Non-Group Premium .......................................................................................21 Table C.19 - AB Non-Group Premium Subsidy .........................................................................21 Table C.20 - Summary of Committee's Observations for AB Plan .............................................21 Table C.21 - BC Fair PharmaCare Deductible, Copayment, and Family Maximum ...................23 Table C.22 - BC Fair PharmaCare – Enhanced Assistance Deductible, Copayment, and Family Maximum ..................................................................................................................................24 Table C.23 - Summary of Committee's Observations for BC Plan .............................................25 Table D.1 - 2009 MBM Thresholds for NB Populations ........................................................... D-2 Table D.2 - 2009 MBM for NB by Household and Community Size ......................................... D-2 Table D.3 - NB Blended MBM Thresholds ............................................................................... D-3 Final Report (December 2012) 5 Foreword In the New Brunswick Social and Economic Inclusion Plan: “Overcoming Poverty Together”, the business, non-profit and government sectors, together with citizens, committed to implementing a series of priority actions aimed at poverty reduction. One of these actions is to develop a prescription drug program for uninsured New Brunswickers. On behalf of the Advisory Committee on Health Benefits of the Economic and Social Inclusion Corporation, it gives me great pleasure to place before you the Committee’s report on the development of an Insurance Plan for Prescription Drugs for Uninsured New Brunswickers. Much has been said in the press over the years about the need for "Catastrophic Drug Plans". A review of the many articles on the subject suggests that many people believe that what is needed is a plan that covers extremely expensive drugs. However, there are many families facing financial challenges because the cost of their drugs, even though none are extremely expensive, is beyond their ability to pay. The mandate of the Committee was to develop a mechanism to provide a prescription drug plan to all uninsured New Brunswickers. The Committee believes that the issue of extremely expensive drugs impacts a small percentage of families. The Committee therefore focused on developing plan options tailored to the needs of all 70,000 uninsured families in New Brunswick, including those who need expensive drugs. In this report, we present four plan options that provide help to families, according to their different financial circumstances, whether the drugs they need are extremely expensive or not. However, it would be fiscally irresponsible, and the plan unaffordable, if it covered all prescription drugs available on the market. The plan options the Committee has developed will cover those drugs that qualify after an evidence-based expert review. This type of review is common practice for all government-sponsored and many private drug plans in Canada. The Advisory Committee is convinced that the four options put forward in this report offer a practical made-in-New Brunswick solution that will provide meaningful help to uninsured New Brunswickers, within our collective ability to pay. Dr. Dennis Furlong B.P.E., M.Sc., B.Med.S., M.D., D.C.L, LL.D. Chairman, Advisory Committee on Health Benefits Final Report (December 2012) 6 Acknowledgements I would like to thank the members of the Committee who contributed significant time, knowledge and expertise toward the development of this report and the options presented. Members of the Advisory Committee on Health Benefits include: • Dennis Furlong, Dalhousie (Chair) • Juanita Black, Saint John • Mike Blanchard, Bath • Jean-Roch Cayouette, Saint-Quentin • Barry Cohen-Thorley, Grand Bay-Westfield • Ron Gathercole, Moncton • Anne Hébert, Bouctouche • Mary Anne Leblanc, Saint John • Jacques-François Levesque, Grand Falls • Derek Oland, Saint John As well, I must thank the staff of the Department of Health, the Department of Social Development and the Economic and Social Inclusion Corporation (ESIC) for their support and assistance to the Committee. These three government organizations and consultants have worked in partnership to support the Committee with its mandate. The support staff includes: • Althea Arsenault, ESIC • Greg Caines, Morneau Shepell • Leanne Jardine, Department of Health • Stéphane Leclair, ESIC • Heidi Liston, Department of Health • Bill MacKenzie, Social Development • Lori Park, Social Development • Howard Slaney, Morneau Shepell • Colette Wasson, Department of Health I would also like to thank all the groups and organizations including the public who have participated in our consultation process and submitted briefs. These are mentioned in Section 3 of the report. Final Report (December 2012) 7 Executive Summary On April 16, 2010, the Economic and Social Inclusion Act established the New Brunswick Economic and Social Inclusion Corporation (ESIC) to lead and coordinate the implementation of the province’s poverty reduction plan “Overcoming Poverty Together”. The Advisory Committee on Health Benefits was formed on January 18, 2011 to assist ESIC with: 1. The development of a vision and dental plan for low-income New Brunswick children. This has been completed and implemented as the Healthy Smiles, Clear Vision program. 2. The development of a mechanism to provide a prescription drug plan to all uninsured New Brunswickers. This is the subject of this report. To arrive at a solution that would adequately address the needs of uninsured New Brunswickers, the Committee proceeded as follows to develop the Insurance Plan for Prescription Drugs for Uninsured New Brunswickers (“the Insurance Plan”): • The Committee reviewed the drug coverage available across the country and discovered that all provinces and territories share many of the same challenges. Prescription drugs are often the best and most cost-effective treatment for many conditions and are increasingly used in place of other interventions. But as the use of prescription drugs has grown, so has the financial burden of rising drug costs on individual Canadians, employers, insurers, and Government.1,2 Drug expenditures are consuming an increasing amount and proportion of health care dollars, and the costs are escalating three times faster than the rate of inflation.3 This information is presented in more detail in Section 2. • The Committee reviewed the characteristics of the uninsured population in New Brunswick using data from the Canadian Community Health Survey. This Statistics Canada sample survey indicated that about 20% of New Brunswickers, or about 70,000 families do not have prescription drug insurance. It also confirmed that uninsured families were broadly similar to insured families except for the fact that they tend to have lower incomes and the highest level of education attained is generally lower. Further analysis indicated that families without prescription drug insurance, as a whole, spend between $120 and $150 million on prescription drugs each year. This analysis also showed that many of these families face significant financial hardship associated with the cost of prescription drugs. This information is presented in more detail in Section 2. • The Committee also reviewed the relevant public drug plans in place across Canada, and concluded that none of these plans offered a complete solution that fit the unique context of the “Overcoming Poverty Together” initiative. The Committee noted, however, that it could use some elements of the plans in other provinces as a foundation for its Insurance Plan options. This part of the development process is also presented in Section 2. Final Report (December 2012) 8 • The Committee formulated a preliminary direction for its Insurance Plan options, but also had several important questions about the best way to meet the needs of uninsured New Brunswickers. The Committee’s questions were discussed with stakeholders in a series of consultation meetings in March and April of 2012. In addition, the Committee received and reviewed 35 written submissions during the consultation process. The feedback from the public and stakeholders strongly supported the Committee’s preliminary thinking, and helped shape the Insurance Plan options presented later in this report. Based on a review of the feedback from the consultation process, the Committee was able to identify important concepts to guide the choice of Insurance Plan options. A summary of the consultation process is presented in Section 3. • Before finalizing its Insurance Plan options, the Committee conducted a high-level analysis of the potential financial consequences associated with the different options to ensure that each would provide a fiscally responsible and financially sustainable solution. The Insurance Plan framework and options including supporting analysis are presented in Section 4. • The conclusion appears in Section 5. It includes the benefits of a new Insurance Plan for New Brunswickers, as well as a number of observations that the Committee made that were deemed important enough to bring to the attention of Government. In particular, the feedback from the consultation process highlighted the need to assist New Brunswickers who have prescription drug insurance but still face financial challenges due to high drug costs. The Committee believes that the options presented in this report could be adapted to address this issue. Based on an assessment of the information available and the feedback from the consultation process, the Committee believes that a broad sharing of costs could be achieved by requiring the participation of all 70,000 uninsured families in a mandatory insurance plan for prescription drugs with a premium. This would allow the costs of prescription drugs to be redistributed across the 70,000 families, so that the prospect of a family facing significant financial hardship would be eliminated for the families participating in the plan. Furthermore, this could be financed primarily by the 70,000 families themselves through payment of premiums. More specifically, the Committee believes that: 1. The Insurance Plan should have a premium calculated to fully recover the expected costs of the plan, and that every individual or family enroled in the plan should be required to pay a premium, subject to a subsidy that reflects the individual’s or family’s ability to pay. 2. The Insurance Plan should be mandatory for all New Brunswickers who do not have a drug insurance plan, and that there should be no barriers to access such as medical exams, exclusion of pre-existing conditions, or waiting periods. Final Report (December 2012) 9 3. In addition to paying a premium, plan members should also share in the costs by making a payment at the pharmacy (e.g. deductible and/or copayment) towards each prescription. Two options for calculating the payment at the pharmacy are presented in Section 4 of the report. 4. There should be no maximum limit on the amount of financial assistance that the Insurance Plan would provide to a Plan member. 5. Families whose incomes are below the thresholds described in Section 4 should receive a 100% subsidy of their premium. The subsidy would be phased out gradually for higher levels of income, as described in the two subsidy options presented in Section 4. The same percentage subsidy should also apply to the dollar limits used in calculating the payment at the pharmacy, as described in Section 4. 6. The current evidence-based process for determining which drugs are listed as eligible benefits on the formulary for Government-sponsored drug plans (e.g. New Brunswick Prescription Drug Program) should be used for the new Insurance Plan. 7. The terms of the Insurance Plan should be reviewed regularly to ensure that it continues to meet its goal of providing affordable insurance for prescription drugs to New Brunswickers. In particular, any flat dollar amounts must be reviewed annually and adjusted, to reflect increases in drug costs and utilization. The Committee’s analysis indicates that the Insurance Plan would redistribute costs much more evenly across the 70,000 uninsured families, and that about two-thirds of the cost would be borne by the families themselves. The remaining costs would be covered by the subsidies mentioned above. These would be funded by both Government and employers who do not provide prescription drug coverage to some or all of their employees. The Committee believes that the investment by Government and employers would provide substantial benefits associated with all New Brunswickers having access to the prescription medications they need. Final Report (December 2012) 10