2007 annual meeting assemblée annuelle 2007 2007 annual meeting assemblée annuelle 2007 2007...
TRANSCRIPT
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007 Annual Meeting ● Assemblée annuelle 2007
Vancouver
2007 Annual Meeting ● Assemblée annuelle 2007
Vancouver
Canadian Institute
of Actuaries
Canadian Institute
of Actuaries
L’Institut canadien desactuaires
L’Institut canadien desactuaires
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Large Drug claimsIP32 Friday 10.30am
Tim Clarke
Jim Lewis
Gary Walters
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Agenda
• Introduction (Gary)• Employer/Consultants’ views
(Tim)• Insurance Company viewpoint
(Jim)• Survey results (Gary)• Discussion (You)
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Large Drug Claims
• Most benefit plans pay for items not covered by government
• Except for PQ, MB, SK & BC expensive drugs are payable by employer plans
• Increasing number of specialist expensive drugs available
• Some maintenance, some one-off
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
The dilemmas
• Maintenance drug – known cost so not insurance
• Government finding ways to not pay new drugs
• Changes so rapid difficult to even price for next 15 months
• Many such drugs don’t cure or significantly improve or extend life
• Employer feels obligation to pay• Is cost/benefit analysis for a drug
even possible?
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
High Cost Prescription Drugs
Employer and Consultant Perspectives
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Background
• Many significant breakthrough drugs continue to be introduced
• Unit cost of these drugs increasing due to:• Research and production costs (e.g. biologics)• Targeted treatments (ie. Fewer patients per drug)• Increased legal risks for producers
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Background• Examples of new drugs in recent years:
Condition Drugs Annual Cost
Rheumatoid arthritis Enbrel
Remicade
$20,000 to $40,000
Cancer (oral) Gleevec
Tarceva
$30,000 to $50,000
Cancer (injectible) Herceptin
Zoladex
$10,000 to $40,000
Multiple sclerosis Copaxone
Rebif
$15,000 to $25,000
Fabry’s disease Fabryzyme $300,000
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Who Pays?
• Key stakeholders –• Government• Employers• Individuals
• Government • Increasingly cost conscious• In many cases question the added value of new products• Delayed decisions• Decisions to not cover many new / expensive products• Varies significantly by province
• Employers• Often coverage by default when the government does not pay
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Employer Perspective
• Balancing act• Employee health• Cost
• Most employers want to cover breakthrough drugs• Plan Design / Risk management considerations
• Plan maximums• Out-of-pocket maximums• Stop-loss
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Employer Perspectives
• Large employers• ASO benefit plans• Generally high stop-loss points (e.g $50,000)• Financial impact of one or two very large claims not significant• Willing to accept greater risk
• Small employers• Insured or refund accounting• Less ability to accept risk of large claims• Want to “insure” risks – both known and unknown
• All employers understanding• Stop-loss has no caps, limits or pre-existing conditions• If we’re transferring risk, why would we buy anything else?
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
High Cost Prescription Drugs
Insurer Perspectives
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Problems
• Moral / ethical / emotional issues abound• Who will / should pay?
• Ultimately insurance companies do not pay (this fact seems to overlooked by Governments as they make decisions)
• Historically Governments have paid for drugs administered in hospital, consumers / employers paid for drugs acquired outside of hospital setting (this is changing)
• High cost, low frequency items make these drugs ideally suited for insurance concept (National PharmaCare or private insurance?)
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Problems
• Do employers really want to pay?• Do employers really want to be in the
position of having to make this decision?
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Insurer Responses to Date
• Cancer drug specific issues• Insurers have reviewed contract wording to
understand what is contractually promised• Lobbying through CLHIA• Need to prepare for reality that:
• Governments are likely not to pick these costs up• No National consistency
• Must understand needs of the customers• Employer perspectives• Employee perspectives• Ensure products available to meet these needs
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Insurer Responses to Date
• Other High Cost Drugs• Generally paid under most standard
contracts• Developed managed drug plans
• Formulary plans• Prior authorization protocols• Why have these not taken off to a greater
extent
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Insurer Concerns – Large Insurer Perspective
• Balancing antiselection / spread of risk issues• Large claims will not “ruin” a large
insurer based on current frequency / amounts
• Concern is not getting more than “fair share” of claims
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Insurer Concerns – Large Insurer Perspective
• Pooling of these claims not a problem but there are concerns about industry practices
• do some insurers:• Refuse to quote on groups with large recurring
claims• Set pooling charges on quote based on past
claims/existence of recurring claims• Set pooling charges on renewal based on experience
• Do clients understand differences in pooling practices (to the extent they exist) and their impact on price
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Small Insurer
• Expect less than one claim – no spread of risk
• Impact of a single ongoing claim in their pool is significant
• May never be able to cover cost from pool charges
• Need pre-ex, cannot takeover existing claims, etc
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Large drug claim pooling
Survey Results
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Survey of current Insurer pool practices
• 13 companies responded representing almost $9.5B of insured & ASO medical premium & equivalents
• Small, Medium & Large insurers• Those only in Quebec – not relevant• All outside Quebec do offer some pooling• Sought info on:
• What groups can get pooling at what level• Cost• What is actually pooled• Client/consultant/broker awareness
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Survey (1)
• All companies offer compulsory pooling for small groups
• Most companies make it compulsory for large insured groups as well
• Available for Refund & ASO
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Survey (2)
• Level usually based on # lives, sometimes at client’s choice
• $5K to $100K pooling levels offered• Usually pool claims by individual,
sometimes by certificate• 7 companies will grandfather prior
pooling but at their own pooling level• Equally $ charge and % premium
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Survey (3)
• Does pooling charge vary by:• Gp’s experience before joining pool
• Gp’s experience after joining pool
• Known future claims
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Survey (3)
• Does pooling charge vary by:• Gp’s experience before joining pool• 2 companies yes• Gp’s experience after joining pool• 4 companies yes• Known future claims• 2 companies yes
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Survey (4)
• All separate this from Out of Country• Total Drugs or total medical costs?
• Pool treatment commenced before pooling?
• Pre-ex on medical condition before pooling?
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Survey (4)
• All separate this from Out of Country• Total Drugs or total medical costs?• Majority medical• Pool treatment commenced before
pooling?• 4 No, 1 maybe• Pre-ex on medical condition before
pooling?• 2 Yes
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Survey (5)
• Any exclusions on an individual joining a pooled group?
• Any direct or indirect out-of-pocket maximums created by the pooling?
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Survey (5)
• Any exclusions on an individual joining a pooled group?
• None• Any direct or indirect out-of-pocket
maximums created by the pooling?• 2 companies yes
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Survey (6)
• Decline to quote a group with past large medical claim?
• Decline to renew a group with a history of making pool claims from multiple individuals?
• Decline to renew a group with an ongoing pooled claim?
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Survey (6)
• Decline to quote a group with past large medical claim?
• 6 yes, 3 maybe• Decline to renew a group with a history of
making pool claims from multiple individuals?
• 2 yes• Decline to renew a group with an ongoing
pooled claim?• 2 yes
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
2007
Ann
ual M
eetin
g
Ass
embl
ée a
nnue
lle 2
007
Survey (7)
• Only 5 companies feel that plan sponsors are aware of and asking about the issue
• Only 2 feel that brokers aren’t aware and asking
• Half companies are not happy with the risks
• All believe that this is becoming a bigger issue