Treating the Symptoms of Canada’s Soaring Drug Prices

Many new medications are arriving with a serious side-effect: their exorbitant cost. “There is now a drug that costs $3 million per person — it’s a one-time therapy, but still,” says Helen Stevenson, CEO of the Toronto-based healthcare company Reformulary Group. “We just reviewed another that has a $50 million lifetime cost. And we’re regularly seeing drugs that are in the $100,000 range.”

The result of these soaring prices is what Stevenson describes as the end to the “blank cheque” era of private sector drug plan coverage. “In the past, plans were wide-open — you could have any drug, no matter the cost. What’s happened to some extent now is that many plans will implement a maximum — say, $10,000 — and after that, you’re on your own,” she explains. Stevenson recognizes that without some sort of intervention, private plans will simply become too costly to operate efficiently. “As drugs grow more expensive, there’s a sustainability issue for employers,” she says. Knowing that, she’s eager to find another solution that serves plan sponsors and plan members in a way that makes financial sense for both.

Back when she was Ontario’s Assistant Deputy Minister of Health, Stevenson helped the public sector navigate financial shifts in the drug landscape by implementing reforms to the Ontario Drug Benefit Program. Since founding Reformulary Group in 2011, she’s been devoted to achieving the same success in the private sector by building a new model for employer drug plans.

For her, the path to improving these plans starts with training plan members about smart comparison shopping. Her goal is to help Canadians evaluate alternative drug options with regard to both their efficacy and their expense. “Most people think, “I walk out of the doctor’s office, and that’s the only prescription for me — there’s just that one drug,” says Stevenson. “But that’s not true at all. There are many drugs to treat most medical conditions — it’s just that as consumers we don’t have easy access to that information. You can’t just Google drug A and drug B and get a clear understanding.”

With that in mind, Reformulary’s DrugFinder app and desktop tool looks to improve the amount of reliable medical data that the average Canadian has access to. “It’s really about advice — having experts review drugs and then having them say, ‘These are better,’” she says. “That means really focusing on the evidence, but then also factoring in the cost.”

This evaluation process plays out during monthly meetings with Reformulary’s team of physicians and clinical pharmacists. “We have people from different medical specialties meet from across the country to do comparative reviews of new drugs,” Stevenson explains. “We’ll have an infectious disease specialist coming at it from their perspective, but then also a cardiologist with a different focus. We invest heavily in that clinical expertise, because it’s important for physicians to raise certain questions, have a real discussion and then make their recommendation.”

The outcome of these meetings is that drugs are sorted into a series of tiers, with different out-of-pocket costs associated with each one. Drugs that work the same and cost more — or drugs that don’t work as well — are classified as non-preferred. “If we take the example of ulcers, there might be a drug that costs $60 per month, but others that are $5 and have the same clinical efficacy,” explains Stevenson. In that instance, Reformulary would assign a lower out-of-pocket cost to the less expensive (and equally effective) drugs, and a higher out-of-pocket fee to the more expensive ones. “It’s incentive for plan members to consider, ‘What about a drug that works the same and costs less?’” she says. A tiered formulary also incentivizes drug makers to price more competitively. “We actively negotiate with pharmaceutical companies to secure a lower net price on the drug cost,” Stevenson says.

Reformulary’s onboarding program is another part of the client education process, coaching people on how to best use its DrugFinder interface. “We really encourage people to look up a drug when they’re at their pharmacy and have this discussion,” she says. “A pharmacist can typically switch patients to different medications without having to call their doctor — although in some cases they might have to, and in some cases they will want to check with the physician based on potential interactions with something else.”

Stevenson hopes the evidence that informs DrugFinder’s rankings will empower its users to gain a deeper understanding of their options. “There’s maybe been a perception that a generic drug is not as good,” she says. “But really, they’re delivering the same clinical efficacy, and many may cost 10 percent of what the brand drug does.” 

That said, Reformulary Group is prepared to make exceptions to its tiered system in certain cases where a branded drug may still be preferable. “We had one this week, where someone was seeking treatment for one medical condition but also had some other very serious conditions. There was evidence that the originator drug may potentially have fewer interactions, and that’s the kind of case that’s compelling,” says Stevenson. “We’re not here to say no to everybody — we’re here to set the baseline. If you do have a legitimate clinical request, we’re absolutely open to reviewing it.” 

Ultimately, she is eager to get Canadians more invested in their health as it relates to prescription medications. “We’re so aware of our finances when it comes to our bank accounts or our phone bills,” she says. “But when people get a prescription, they often walk out without even looking at what it’s for. We want people to be aware of what drugs they’re taking. Yes, because they might not be reimbursed for the full amount, but also because of potential side effects or because there may be alternatives that work better — and to be more engaged in their own healthcare. That’s our bigger ambition.”