Insights from a pandemic: Long-term COVID-19 drug risks

For the remainder of 2020 and beyond, COVID-19 will continue to add to the existing pressures driving up drug costs. Examples of contributing factors include:

• Claims for acute drugs will likely increase as elective surgeries resume and plan members address non-emergency health issues that were left unattended during COVID-19.
• Plan members whose employers are facing financial strain due to COVID-19 may stock up on their prescriptions in anticipation of losing their job and/or their benefits.
• An ongoing increase in the prevalence and severity of mental health issues and chronic conditions. In May and June, we saw a dramatic increase in the number of claimants for depression, ulcers, blood pressure and diabetes, and depression was associated with 1 in 5 claimants.

All trends thus far suggest we can expect about a 10% increase in average paid amounts per certificate in 2020 compared with 2019. But the impact won’t be the same for all groups. There will be significant variations, particularly for smaller groups, and some may see much larger cost increases.

Unknown COVID-19-related risks

Another risk exposure may come from the costs associated with drugs used to treat or prevent COVID-19. There are currently numerous vaccines in development, and more than 300 clinical trials are underway for both new and existing drugs to determine their effectiveness in treating the virus.

The cost of any vaccine or whether government or private plans will pay for it is unknown. Regardless, there will likely be other drugs indicated for the treatment or prevention of COVID-19 that private plans will be expected to cover. The cost of this impact for private payers is unknown, but potentially high.

Another unknown is what will happen with dispensing fees. While most provinces have lifted their 30-day prescription refill limits, it remains to be seen whether pharmacies will resume dispensing 60- and 90-day refills at pre-COVID levels for private plans. If not, this would mean the dispensing fees will continue to drive up drug costs.

Advisor opportunity

Despite the increase in drug plan risk in recent years, little has changed in plan design trends. Very few plan sponsors have adopted managed plans or other plan design options that could help manage risk.

This presents an opportunity for advisors to educate their clients about the risks their drug plan may be exposed to and the options available to manage that risk.

A practical starting point for those conversations is our Drug Plan Design Tool. With two simple questions, it can help confirm your client’s objectives and identify some best-fit solutions for their plan.  Ask your Group Account Executive or myFlex Sales Manager for a copy of the tool.