What you need to know about the Transparent Drug System for Patients Act!
Kevin Routley , Partner, Employee Benefits & Pensions

The Transparent Drug System for Patients Act passed third and final reading on June 19, 2006. This legislation is part of the government's plan to reform the provincial drug system and deliver better value for money to the taxpayers of Ontario.

The government plan is expected to save up to $277 million per year. These savings will be reinvested into the provincial drug system to support improved patient access to drugs.

The government's plan includes :

• Achieving significant savings through volume discounts for all drugs purchased for the Ontario Drug Benefit Program
• Improving patient access to drugs through new conditional listings, Exceptional Access, and rapid reviews of innovative drugs
• Listening to the views of Ontarians through a new Citizen's Council that will advise the Ministry on the social aspects of drug policies and priorities
• Strengthening transparency by giving patients a role in drug listing decisions of the Committee to Evaluate Drugs
• Recognizing the valuable role of pharmacists in patient care by paying them for enhanced patient counseling and other professional services
• Utilizing the expertise of Ontario's pharmacists through a new Pharmacy Council to advise the Ministry and the Executive Officer of the public drug programs
• Freeing doctors of the burden of paperwork associated with Section 8 drugs

The province's Ontario Drug Benefit program provides drug coverage for the 2.2 million Ontarians who are seniors or who receive social assistance or provincial disability support

For employee benefit drug plan sponsors, this bill has both positive and negative attributes. Three of the main proposals: off formulary interchangeability, modifications to the pharmacy structure and the rapid review of breakthrough drugs all appear to reduce the burden of drug costs for employers.

With the interchangeability measure, brand name medications would no longer have to be listed on the Ontario Drug Benefit (ODB) formulary for generics to be considered equivalents. Currently, there are several medications that have generics but are not listed on the ODB, including popular drugs like Losec for gastro-intestinal reflux (one of Canada’s most popular drugs) and Imitrex for migraine therapy.

The proposed change to the pharmacy reimbursement structure places more stringent caps on the mark-up of drugs to 8% from 10%, up to a maximum of $25-a change that some say will make it cost prohibitive for pharmacists to stock high priced drugs. This change would mean that the cost of medications would drop; a win for plan sponsors.

The rapid review of breakthrough drugs and the introduction of a conditional list will allow patients the new drugs on a conditional basis while further information is collected to support a permanent listing. This should be positive for employers who offer post retirement benefits. Like any government initiative, “the devil is in the detail” and provided doctors complete the necessary paperwork involved, the ODB will pay for these “limited use” drugs.

When the proper process is not followed, the cost of the drug may be inadvertently picked up by the seniors’ private insurance plan. The proposal means that more drugs will be placed on the limited use list. Therefore, if these types of claims are not adjudicated more strictly, employers may experience an increase in costs for their retirees.

Wrapped around another legislation recently passed removing Mandatory Retirement in Ontario, Bill 102 could have a significant impact on employers. The proposed bill states that the Ontario government would become second payer for working seniors with private insurance plans. That means that if at age 65 an employee elects to continue working, an employer would be solely responsible for covering their drug costs-not the ODB.
Many employers have benefit programs that cover employees for health and dental until age 70 or more. With the details of the removal of mandatory retirement and the rules listed below, employers may wish to consider a change to the termination age of benefits.

Benefits & Insurance Plans:

• Currently, under the Employment Standards Act, employers are prohibited from discriminating on the basis of age in providing benefits to employees aged 18-64. This provision will remain in place
• Nothing in the legislation prevents employers from providing benefits to employees aged 65 or more
• Individuals aged 65 and more continue to be eligible for government benefits such as the Ontario Drug Benefit Plan

For more details of the two legislations and the effects you can expect as an employer, please contact your Selectpath Employee Benefit Specialist to walk you through the risks and rewards of your program set up.

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