By sharing the insured cost of reimbursing repeating high and very high cost drugs of employees who’s employers have fully insured drug coverage plans, the member companies help maintain the viability if the insurance programs their employees belong too.  In so doing, they allow the employees drug coverage to continue so that their treatments can continue.

The drug treatments covered by an employer’s insurance are often life changing and even life sustaining for the Canadian’s who need them.  With out the sharing of the drug costs over ongoing threshold annually, the related costs for these drugs would result in very material increases to insurance plans when they renew annually.   The price increases, in many instances could renter the plan unaffordable for the employee’s employer.   This is especially true for employers with small and mid size employment bases.  The result could very well mean a cut back on drug coverage by the employer or elimination of drug insurance outright.   This is an outcome no one wants.

While the sharing of these costs between insurers doesn’t eliminate the inflationary pressures on the drug plan, it does allow plans to remain affordable.   Drug pooling provided by CDIPC’s member companies is not a perfect solution but it provides a means to ensure Canadians continue to to be able to afford the drugs they need to thrive as both employees and members of Canadian society.

The Canadian Drug Insurance Pooling Corporation (CDIPC) has mandated the minimum requirements for each insurer to use for their Extended Drug Policy Protection Plan (also called EP3).  These requirements ensure a consistent handling of recurrent, high-cost drug claims when developing the premium rates for impacted sponsors.  It promotes affordability, in particular for small and medium sized employer-sponsored drug plans that cannot absorb large premium increases. This helps fully-insured plans remain financially viable to the benefit of the plan members protected by them.

Examples:

Group ABC

Group ABC’s drug plan is CDIPC eligible and there are no certificate exclusions. In 2015, certificate 123 had drug claims of $80,000 and the current insurers pooling limit is $30,000 per certificate (the maximum allowable under the CDIPC framework). When the group renews, $50,000 of certificate 123’s claims will be pooled and the remaining $30,000 in claims will be included in the client’s experience. Since the CDIPC framework mandates that the pooling arrangements offered by participating insurers, are applied consistently, the employer can be reassured that the current insurer will not increase the pooling charges solely as a result of their individual pooled experience.

Insurer XYZ

Group ABC’s drug plan is CDIPC eligible and there are no certificate exclusions.  From January 1^st to December 31^st 2014, Certificate 123 had drugs claims of $75,000. From January 1^st to December 31^st 2015, drug claims for that certificate reached $80,000.

Certificate 123’s drug claims in 2015 would qualify for CDIPC pooling since claims exceeded the initial CDIPC threshold for two consecutive years, $55,000 in 2014 and $60,000 in 2015. Therefore in 2015, drug claims in excess of the ongoing threshold of $30,000 will be included in the industry pool.

CDIPC sets the maximum amount that can be covered by the industry pool. For 2015, the maximum was $500,000.  The cost of this industry pooling is not free.  Each insurer is obligated to pay a pool charge into the industry pool that is equal to their market share of the total pooled claims for the entire industry.