Aon's longstanding solution for drug price fluctuations benefits national
employers

Firm's approach a long-time differentiator, emphasizes Aon's expertise in offering tested, integrated solutions to clients across Canada

TORONTO, Aug. 10 /CNW/ - Recent changes to provincial drug systems (i.e., British Columbia, Alberta, Ontario and Quebec) favouring affordable access to generic drugs not only vary per province but have also prompted discussions and closer examination into the granular impacts to employers and employees and how they may best prepare for and mitigate such impacts.

For instance, the B.C. government reached an agreement with pharmaceutical associations that will see PharmaCare reduce the price it pays for generic drugs to 35 per cent over a three-year period. However, the change is accompanied by incremental increases in the maximum dispensing fee payment and drug mark-up over the same period (see Aon's Ready publication for details http://www.aon.ca/pubs/RDY/10/aug/Aug-Sp-Ready.pdf).

Since July 1, for private plan members in Ontario, the cost of generic drugs in solid dosage forms cannot exceed 50 per cent of the brand name price. And for those covered by the Ontario Drug Benefit plan, the cost of the same generic drug cannot exceed 25 per cent.

The Quebec government also intends to require generic drug manufacturers to reduce the cost of a generic drug to 25 per cent of the brand name price. And in Alberta, the generic drugs cost already on the market cannot exceed 56 per cent, while the cost of new generic drugs cannot exceed 45 per cent of the brand name cost.

While the generic drug price reduction movement appears to spell good news to private plan sponsors, it does not necessarily translate into savings for private plan members since dispensing fees and mark-ups remain unregulated.

Although a growing number of clients adopt a "fee and margin cap" approach offered by drug card providers in an attempt to mitigate price fluctuation, this control is not activated in Quebec.

In 2007, Aon developed and implemented a unique and exclusive management approach for Quebec to ensure clients get the same benefit and controls other provinces already get. For the first time, employers with national workforces could automatically benefit from the new price negotiated in all Canadian provinces, including Quebec. In other words, as of its effective date, the maximum eligible amount is automatically calculated on the basis of the new price negotiated by a given provincial government. While Aon ensures its clients are aware of applicable conditions and exceptions, a member will have to pay extra if the amount charged by the pharmacist was not lowered to reflect the actual cost reduction the manufacturer agreed to.

About Aon Consulting Canada

Aon Consulting is one of Canada's leading integrated human capital consulting and outsourcing firms. Our more than 800 Canadian professionals in 12 offices coast-to-coast offer benefits, talent management and rewards strategies and solutions to help clients attract, retain and develop world-class talent. Driven by inspired and independent thinking, Aon Consulting is committed to delivering innovative and personalized business solutions with tangible value to help clients shape their organization into the workplace of the future. For more information, visit http://aon.ca.

For further information: Media Contact, Autom Tagsa, 416-542-5659, [email protected]; Marilynne Madigan, 416-230-9699