So last month Manu life announced that it was changing its coverage plans for Specialty Care drugs Susan krinsky Robertson covers retail for the globe and basically what they said is that they would quote unquote primarily be fulfilled by Shoppers drugmart and other la blah owned pharmacies these Specialty Care drugs
Include the medication for chronic but common illnesses like rheumatoid arthritis Crohn’s disease and osteoporosis the change here was that they were ending their agreement which is called a preferred Pharmacy Network or preferred provider Network also known as a PPN with another healthcare provider called Bayshore healthc care
And basically the change that was made was that manual life was cutting that down to a deal just with BL blah and Shoppers this change didn’t go unnoticed by the public here’s the Globes Insurance reporter Claire O’Hara and the result of that was there was a lot of patient groups as
Well as group benefic clients who were currently getting their prescriptions from Bay shores and it left a really big public outcry as to why this was happening there was also political pressure um Minister franois Philip shampine came out and raised competition concerns and this public outcry worked
Manual life reversed course and it was they were swinging entirely the other way where they went from an exclusive agreement to now they were going to everyone could choose any pharmacy of choice within Canada for their Specialty Care drugs together Susan and Claire along with small business reporter Chris
H looked into these PPN preferred Pharmacy networks today we’re talking to Claire and Susan about how PPN work who benefits and who doesn’t I’m Mana Wilms and this is the decel from the globe in mail Susan Claire great to have you here thanks for having us thank you for
Having me okay so I think it’s worth starting with the definition here or at least an understanding of what this term means so this is PPN this is preferred Pharmacy Network or preferred provider network uh Claire I let’s start with what exactly these are and and how do
They work a PPN is a preferred Pharmacy Network or preferred provider Network and in Canada about a decade ago um all major insurers started looking at these type of agreements and what it is is there’s a pharmacy or a group of pharmacies that make an arrangement with a life insurance company the life
Insurance company will send their uh employees or group benefit clients to those pharmacies in order to get discount pricing now the insurer say it’s a way for them to manage the increased cost um of pharmaceuticals in Canada and the PPN are able to say well we can do bulk purchasing and that way
We can give the discounted price and pass it on to the employees or the employers directly okay okay so if you’ve got like an insurance plan with your company whe whoever you work for this might be part of of that this is where you could essentially get your
Medication from then yeah it is important to note that these PPN Arrangements in Canada are primarily around group benefit packages it isn’t something that you might find in an individual insurance package for a retiree or a newcomer to Canada it is something that’s more specifically involved with specialty hair drugs in
These group benefit clients okay and is there a standard model for for PPN or are there I guess different types yeah and that’s definitely what where we decided to dive into it’s a very complex environment there’s a lot of different nuances and wording that each insurer
Uses and what we found out is there seems to be several different models and and the big ones are there’s an open network or there’s a Clos Network and there can be mixes of that as well so with manual life they actually have a bit of both and so in an open network
What that means is that as an employee I can choose to go to the open network and get the discount to drug or if I don’t want to go to that list of pharmacies if I have a local pharmacy that I have a better relationship with I can continue
To go to that Pharmacy but I just won’t receive the discount on on that drug in a Clos Network which is a little more controversial is the the arrangement does not allow an employee to go outside and choose a pharmacy of their own liking okay and I guess just wondering
Why aren’t all plans like an open pbn why why have the closed option so it’s not actually transparent around why the insurers decide to go with an open or a close and as I pointed out manual life and some of their clients they seem to have both of them so the employer could
Take on the decision whether they want it to be a voluntary open or closed type of network and that’s probably has to do with the cost involved and other insurers they just don’t give that option if you sign up for the specialty care plan you only have the mandatory
Option option which means then your employee would have to use that Network ofes now the other term um that we should touch upon is the exclusive agreement and that is sort of the where the public outcry came with the manual life Shoppers deal because in that scenario it wasn’t that they were just
Setting up a closed PPN it’s that they were only picking one group of pharmacies which was the LA blog group of companies okay that’s like a step further than a closed PPN then and while it’s certainly not the the first exclusive agreement in Canada it’s certainly the largest between you know
You have you have the largest uh insurance company in Canada partnering with a prominent Canadian name like wblas okay so then just I guess to explain this a little bit further what happens if you need one of these drugs and and you’re part of one of these
Plans um but the drug that you need is not at the pharmacy that’s closest to you what what happens then in some cases these plans will provide for home delivery and so they say that that is a part of an offering convenience to individuals and so it’s often uh an
Option where you can pick up in Pharmacy or home delivery in some cases home delivery is actually the only uh option that’s offered we spoke with a patient who had a medication for psoriatic arthritis which had a cold chain protocol so the medication had to be kept at a certain temperature at every
Step of the delivery chain and had to be injected in other cases you know for these specialty medications it might not be a typical Pharmacy that you’re going to some of these are infusion drugs where you actually have to have an infusion at a clinic overseen by a nurse
And that requires a visit to an entirely different type of location which might have different resources attached to it and so in some cases uh it’s just a bit more of a complex system for delivering the medication one thing that we’ve heard from insurers that’s also not
Entirely transparent is they all sort of give the opportunity for you to apply for an exception to use a local pharmacy what we don’t really have a big picture on is what percentage of those patients are approved to use the outside pharmacies and how common are PPN in
Canada do we know that’s a really good question we would love to know that but the transparency over the PPN system in Canada is not very good um you know there aren’t a lot of public records that tell us exactly how many PPN there are how common they are um you know what
Percentage of drug costs are represented by ppns um and so you know even some of the groups that we spoke to even pharmacist groups themselves say it’s hard for even them to track all of the PPN out there because sometimes these are deals that are done confidentially and you know companies are not
Necessarily entirely public with them it’s also something that the insurance companies aren’t putting publicly up on their website of you know they’ll say there’s 300 pharmacies but they won’t list all the pharmacies on their website publicly um it sounds like it’s more of a relationship with the employee with a
Specialty care nurse as Susan was pointing out there’s these clinics which is part of the benefit the insurers are saying that that they’re getting uh a more Specialized Care from nurses and trained professionals that could administer these drugs I guess I’m wondering about the position of of
Pharmacies now like do do we know do PPN have support amongst pharmacies not entirely uh so we spoke with pharmacist groups who said they believe there’s no role for them uh the Alberta pharmacist Association for example put out a position statement last year objecting
To the rise of PPN and their CEO told me that open or closed or exclusive she doesn’t believe there’s really any argument for these and for an insurer essentially playing a role in steering a patient’s care she believes that that and her group believes that that should be the responsibility of healthc care
Providers including pharmacists um others see it as a more complex picture there are also Nationwide Pharmacy associations one that represents both large chains like La Blas and Independence and you know their president told me that she believes that there is a role in some cases for open
Ppns um there are also large retailers who have uh told us their position on it I spoke with an executive at London Drugs a major chain out west who told me that they do participate in open PPN but really see no argument for these types
Of exclusive deals um that you know if a pharmacy is able to provide the same level of service as any other Pharmacy they should have a chance to participate in delivering those drugs if their patients wanted and so there’s a bit of a plurality of opinions but certainly I
Think it’s fair to say that across the pharmacy industry that there is rising concern about the proliferation of these agreements over the last decade in Canada and and with the open PPN Network um you know the insurers have also come forward that have those networks saying we also you know allow local local
Pharmacist to sort of apply and join the network and and that’s also sort of true with some of the mandatory ones they say we’re we’re not exclusive to one Pharmacy so if there is a pharmacy that would like to come into our Network there’s a process for them to apply
Although we are hearing more in the industry from the locales that that’s not actually very easy task and sometimes they’re told that the network is closed right now for newes to join so that’s another area that’s not very transparent and we can’t really get a sense of what that process looks like
Okay so it sounds like there’s not a ton of transp here so we’ve kind of got a bit of information around this but not not a totally clear picture and of course we are talking about the Canadian system and so I just I just want to ask
Is this common elsewhere that we see PPN kind of in the space yeah the US is really the blueprint for this system PPN are much much more common in the US and they started to spread across the US much earlier than they did here in Canada it’s not a perfect comparison of
Course because the Canadian and US Healthcare systems are quite different and there are things that prevent certain aspects of uh the expansion of PPN from happening with the same Cadence here but definitely people in the industry look to the us as an example of what they want to avoid here in Canada
We’ve heard lots of concerns about the potential of PPN if they become common enough to really limit individuals choices about where they receive care and also to limit the access of independent small business owners to the business that they need you know we’ve been told that in the US there are
Places where independentes have shut down because this kind of patient steering has become so common and it’s it makes it harder for them to compete with the larger chains who enter into these types of agreements and so definitely while the US is not a perfect comparison for Canada and we certainly
Can’t use it as a crystal ball it is uh something that people are watching as a warning sign for the kinds of systems that many people in the industry don’t want to see here yeah so it sounds like patient care is a big part of this but
Competition or lack thereof is is a really key part here as well as is individual’s choice I think one of the huge refrains that we heard over and over as we spoke to people across the industry is that anything that limits People’s Choice is not a positive
Development for Canada and I think what we have to remember is that because it’s around the group benefit environment in Canada that it’s not like you can go shop around you can’t just decide to go use sunlife or go use green shield or go use another one because you’re at the
The beck and call of what your employer chooses we’ll be right back Claire it it sounds like the point a big point of these plans is to really cut down on costs to save some money but let’s actually dive into this a little bit who exactly is is seeing the cost
Savings yeah and and again not a ton of trans parency of of how these Arrangements work and and in In fairness there’s a complex I guess calculation to it because it all goes back to the employer so let’s remember that it’s the employer that’s choosing the benefit
Plans and so if they sign up and they say we’re going to opt in and include the Specialty Care um medication for our employees and as as we if you think about your group Benefit Plan maybe your insurer covers 80% and you cover 20% um that would be the breakdown of the cost
Savings there’s other plans where the insurers taking more risk of of the benefit policy so the 100% might just go to the employer saving on that and they’re called the plan sponsor in those arrangements um so it’s really not a one-off answer um there there is a 2018 report that the Ontario pharmacist
Association did and in that report there there was um patients who were commenting on it could be $500 a year that they saved themselves because the percentage jumped from they got 80% coverage and it dropped down to 50% so that was out of pocket for them that they had to pay
$500 okay and what about the role of the employer because it sounds like they have a kind of a a part in this in choosing what happens here so can you tell me about that yeah and it goes back to the sort of open and close the the
Nuances and the wording of voluntary and mandatory so the employer is the one that’s selecting whether or not they have them but it’s it’s the network that they may not have a choice with so while they can opt in and out of having that Specialty Care Drug coverage they’re not
Able to say well I want an open network it’s up to you know if they’re with manual life that might be an option because they used to well previously prior to this agreement they had an option in other cases the employer will not get to decide it’ll be like if you
Opt in you have to go to the mandatory Network you opt in you have to use these pharmacists there’s also an interesting role that employers can theoretically play here I mentioned L London Drugs before so as a pharmacy London Drugs uh has a policy they do participate in open
Ppns and in fact told me they believe there’s a role for those for those standards of care reasons um that I raised earlier but they are not supportive of closed or exclusive ppns and in fact as an employer London Drugs dropped its insurance provider about a
Decade ago uh it pulled out of Great West Life which was its uh insur at the time now which is now Canada Life and uh switched over to de jardan and they told me that was because of the Great West Life policy at the time of participating
In enclosed PPN which London Drugs does not support and so you know theoretically employers also have a choice as to the types of insurance plans they’re willing to participate in and we touched on this a little bit before but I I just want to talk about pharmacies again so in from the
Perspective of the the pharmacies like are they saving money with PPN or how does that work I think from the perspective of the pharmacies the benefit is not cost saving it’s volume of traffic and volume of customer traffic uh that that is directed their way and enough to make up for whatever
Downsides there are to participating in a PPN there are sometimes increased costs to to participating in a PPN so when I spoke with London Drugs one of the things that they told me was that when there are open PPN um sometimes pharmacies will have to make a commitment to certain standards of care
Uh they called it and so that can mean things like holding a specialty drug in their own inventory so that it is available for individuals who need it a lot sooner um and what that is is that’s a cost for a pharmacy and then what about the person who needs the
Medication like do do PPN have any benefit for for the plan member so the insurers would say the reason that they’re getting into these agreements is for patient care you know it’s it’s these are third-party networks for the most part they’re not run inth house by the insurance companies so these are
Companies names that are not typically known in you know they’re not household names for the most part but what they are is some of them can be uh specialty care clinics that like Susan had pointed out earlier that you go physically to that clinic and they have nurses on
Staff and they’re specialized in those drugs um that you would sit down there and get your IV administered they know how to manage and store the drugs versus having it dropped off on your doorstep and you would have to maybe get a nurse show up at your home that would also be
Part of the PPN if you needed that they would set that up so the insurers certainly um when they’re talking about there’s cost savings but they’re also talking about a level of patient care there’s also concerns about whether insurers should be part of that care to
Begin with yeah I guess I’m I am wondering a little bit about the insurers CLA like what have they said because there seems to be a bunch of criticism particularly around competition as well as transparency which we’ve touched on here so what have insurers said about all of that the
Canadian life and health insurance Association you know they got back to us and said that you know part of the reason that they have these agreements is really about trying to manage the increasing costs of of medication especially around specialty drugs but they didn’t really go in further into
What the benefits were and you know why we started to see these ppns over the last decade uh and and I will say it’s also it’s a Arrangement that is constantly evolving some of the insurers had one agreement in place now some of them have three networks in there and it
It’s constantly evolving it’s constantly changing so as a consumer you might be set up and you have a specialty care nurse and you’re going through you know Express Scripts Canada and then you might find out later like we just saw in the manual life Shoppers deal that could
Change right and that’s a big impact to someone if you’re already used to getting your medication through one provider and that all of a sudden that can change on you and and CLA you just mentioned that drug prices are increasing do do we have a sense of how
Much they’ve increased by so to break out the special Special Care drugs we don’t know specifically around what the increase is Private health insurers don’t break out what their um total cost of of each drug is individually we do know that um they paid out about 14.3
Billion in drug claims we don’t know specifically how much of that would be the specialty drug claims it is known in the industry that drug costs are getting more expensive we’ve seen in the public health plans which account for about 43% of prescription drug spending that they
Saw their cost rise 6.4% in 2022 and that was mostly around they stated around um Specialty Care drugs okay this is a big pitcher question but I’m I’m wondering like are are PPN essential like is there a better way maybe for provinces to address some of these issues we’re talking about like
Transparency access choice is is there a better way to do this well some of the people we spoke to pointed out that one jurisdiction in Canada has already taken action on this and they actually didn’t take action specifically on PPN they simply took action on patient choice so
Quebec has legislation in place that protects people’s right to choose the health provider or the social services provider that they go to um that includes hospitals pharmacies clinics any other health or social services provider it’s generalized language in their legislation that was not designed specifically to address PPN because it
Was written before ppns really began coming to Canada but uh people across the industry of told us that this functionally makes ppns not a thing in Quebec and some of the people in the industry who object to the rise of PPN have questioned why other jurisdictions and of course Healthcare is a provincial
Jurisdiction why other jurisdictions haven’t taken similar actions Okay so we’ve talked a little bit about maybe things legislators can do also what employers can can think about but I guess Can employees like the people who are actually part of these group benefits plan can can they do
Anything about this yeah well it might not seem like it because they are locked into a group benefit plan with their employer I do think they have a voice you know there are certain circumstances where if they’re part of a union they can go to their union rep and and there
Are scenarios where unions have gone and and brought it to the employer that they’re not happy with these Arrangements particularly if they catch um wind of it happening before so they can go and and fight for the employees that way and I think even if you’re not
Part of a union addressing it directly with your HR or whoever handles the benefit plans there’s a power in numbers to let them know that yet that you’re not happy with this change or the locked in particularly if they change providers or make a change like manual life
Did Susan Claire thank you so much for being here today thanks thanks for having Us that’s it for today I’m Mana caraman Wilms our producers are meline white Cheryl Sutherland and Rachel Levy McLaughlin David Crosby edits the show Adrien CH is our senior producer and Angela Penza is our executive editor thanks so much for listening and I’ll talk to you tomorrow
Exclusive deals struck between insurance companies and pharmacies are increasingly drawing scrutiny from patients, pharmacists and cabinet ministers. The arrangements, known as preferred pharmacy networks (PPNs), are meant to deal with rising prices of pharmaceutical drugs. But detractors say these plans mean less transparency, competition and consumer choice.
The Globe’s retailing reporter Susan Krashinsky Robertson and wealth management and insurance reporter Clare O’Hara explain why the blowback against PPNs is rooted in questions about who gets to approve treatment for patients.
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