Buck Bond Group

Still Thankful

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Holidays provide a wonderful break from the routine that clutters our brains. This past weekend was Thanksgiving in Canada. It was a time for food, family, friends and to ponder the things we are all thankful for. Naturally, I found my thoughts turning toward high cost drugs.

I am thankful that I do not require a drug that costs more than my annual salary. And I am hopeful I never require one. Insurers are talking gloom and doom and increasing pooling charges to reflect the risk of these drugs on their bottom lines. If I listen to them, it sounds like we will all need a high cost drug at some point. In reality, these drugs will only treat a small population, so drug manufacturers are indicating they need to charge outrageous prices to cover the cost of development. (While I don’t want to go off on a tangent here, some experts are suggesting the development is largely done in universities, at little cost to the company that eventually distributes the drug, but I’ll save that for a different day.) The cost of these new breakthrough drugs is crippling for most people. One of the oldest and most prevalent high cost drug in Canada is Remicade, used to treat several debilitating diseases including Crohn’s and rheumatoid arthritis. It has an annual price tag of about $30,000. The cost varies depending on the condition being treated and the patient. More recently, a cure for Hepatitis C was introduced with a one-time cost of about $70,000. While that drug provides an actual cure –  eliminating the need for future treatment, potential disability and premature death –  a typical family cannot afford to cover that kind of  cost. Neither can many Canadian plan sponsors.

“Clear concise communication contributes to employee satisfaction with the plan and helps avoid misunderstanding about coverage.” Lizann Reitmeier, Health Practice Leader, Toronto

“The cost of new breakthrough drugs is crippling for most people. I believe there is an opportunity for an insurance product here.” Lizann Reitmeier, Health Practice Leader, Toronto

So, in my peaceful holiday state of mind I was toying with solutions to the challenge of protecting insurers’ bottom lines, while protecting the health of the nation. I like to keep busy. I came up with a couple of observations.

  1. Insurers have the ability to price the cost of replacing income for disabled employees, possibly for as much as say 45 years, if the disability happens early enough. According to Statistics Canada, one in three Canadians will be disabled for more than 90 days over the course of their career. That sounds like a pretty high risk.
  2. Insurers and provincial plans do not coordinate to share the cost of these high cost drugs for people who are in the workforce in most provinces in Canada.
  3. The chance of needing a drug that costs $500,000 per year is very low. Experts indicate only about 100 Canadians require this treatment currently.
  4. We should crowdsource the funds to cover high cost treatments. Just kidding.

I believe there is an opportunity for an insurance product here. Maybe it is the current pooling arrangement carriers are providing. The insurers would need to turn it upside down and sell it to me. Make me need it. Make it transparent and somewhat accountable. Make it like Long Term Disability coverage or Critical Illness coverage. Give me the peace-of-mind that comes with knowing, absolutely, that should I ever need a high cost drug it will not mean financial devastation.

I believe governments and insurers have a role to play in ensuring appropriate prescribing. Is it appropriate to provide a high cost drug to a terminal patient where there is no evidence it will prolong a quality life? Am I the one to determine that? No. But there are medical experts who determine the cost benefit of drugs every day.

Lastly, I believe it is the responsibility of governments, insurers and shareholders to hold drug companies responsible for the price they put on human life. If the experts are correct and most of these breakthroughs happen in university labs (where researchers are working for the good of mankind), then these drugs should be used to help Canadians – not to ensure hefty pay packets for executives or high returns on stock prices.

Okay, these are lofty ideals built in a moment of idyll reflection. Either way,  we should continue being thankful these high cost drugs do not impact most of us and then start shopping for that new insurance product.

Stay well!


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