CDIPC Overview
For Benefits 3 conference
April 2016
Dan Berty, Executive Director, CDIPC
© Canadian Drug Insurance Pooling Corporation
Origins
Initial concerns – Policyholders
Initial concerns - Industry
 What if recurrent drugs become
expensive?
 Is the industry making it too easy
for the government?
 What will be the impact on pooling
charges?
 Will the pooling charges need to be
experience rated?
 What happens if I have a large
claimant?
 Would I take over a group with a
large claimant?
• Will my cost be sustainable
• Will I be able to change carrier
 How could this affect my overall
experience
 Is there a reputation risk?
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Question
How do we manage, as an
industry, the high drug cost?
Answer
Pooling mechanism with 2 levels:
 EP3 pool (insurer/employer)
 CDIPC (industry/insurer)
Private Industry Initiative
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EP3 Pool Purpose – Plan Sponsors
 EP3 – proprietary Extended drug Policy Protection Plan
 Protect/Manage risk for the individual employer
 Rules for EP3 are set in the CDIPC framework/arrangement
 Straightforward:
• Pool all claims above threshold set by insurer
• Pooling rates are set for the pool
• Only covers fully insured plans (not ASO or Refund accounting)
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EP3 Pooling – Plan Sponsors View
Insurer EP3 Pool(s)
Insured
plan
sponsor
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EP3 Pool Characteristics
 Key principles (EP3 and CDIPC)
• Affordability
• Availability
• Transferability of coverage
 Insurers
•
•
•
•
•
•
Must set up at least one EP3 pool
They establish multiple EP3 pools
Pools can not be anti-selective in nature
Rates must be set for each pool
Rate for the pool can be based on the experience of the entire pool
Insurers do not have to disclose EP3 makeup other than confidentially to CDIPC
annually
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EP3 Pool Characteristics
 Plan Sponsors
• Rates can not based on the experience of a specific employer
o No anti-selection
• Threshold at the insurer’s discretion
• Pool only covers fully insured plans (ASO not covered)
• Fully insured plan can’t opt out
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EP3 Pool Characteristics
 At renewal
• Renewal rate calculations can only consider non-pooled claims.
• EP3 pooling charges may increase (or decrease) for the entire pool.
 Excluded certificates
• Can be identified when a plans moves from Refund or ASO to Fully Insured.
• If a plan moves from ASO to fully insured, certificates with claims falling into the EP3
pool can be included or excluded from EP3 pooling.
• No certificates with claims exceeding CDIPC threshold can be included in CDIPC
pooling.
 Only non pooled claims can be considered at quote time in “base premium
rates”.
 Drug and non drug can be pooled together (the EP3 rules only apply to
drugs).
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EP3 Pool Purpose – Insurers
 Covers the non-recurring high cost drug claim
• Recurring claims = CDIPC pool
 Manages reputation risk
• Large claims are payable
 Industry pools:
• Allows plan sponsors to move from a carrier to the other
• Protects smaller insurers
 EP3 and industry pool (CDIPC) – two could be independent
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About
 Not for profit corp. established in April 2013 by
CLHIA member companies to pool recurring
catastrophic drug costs (paid claims) from
individuals belonging to fully insured plans.
Available
Competitive
 A common agreement & framework to enable the
CDIPC’s guiding principles.
Affordable
Guiding
Principles
Participative
 Framework provides for insurer pooling (EP3) and
industry pools (Pharmacare, Quebec, rest of
Canada).
Transferable
Viable
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EP3 Pooling and CDIPC
– Insurers View
CDIPC Industry pool
2016
industry/CDIPC
pool threshold
$32,500 ($30K
2015)
Insurer risk
> $500K
EP3 threshold
(ex: $10,000 is
often typical)
Payable @ 85%
2015 & 2016
industry/CDIPC
maximum $500,000
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Certificates must have repetitive
high cost drug claims to qualify for
CDPIC pooling.
 Initial
Individual certificates must exceed
yearly CDIPC “initial threshold” for 2
years to qualify for pooling at CDIPC
level.
 Ongoing
After two years, certificates must
continue above yearly “ongoing
threshold” to qualify for pooling at
CDIPC level.
Year
Initial
Ongoing
2012
$25,000
$50,000
2013
$25,000
$50,000
2014
$27,500
$55,000
2015
$30,000
$60,000
2017
$32,500
$65,000
• Grace year: If claims not above
“ongoing threshold” in one year but
exceeded in the following one the
certificate will still qualify in the following
year.
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Example
 Insurance Company “A” has an EP3 plan which pools claims at the individual
level / certificate level at $10,000 (somewhat typical)
 Example of an eligible certificate hitting EP3 then CDIPC industry pool (in 2nd
year of exceeding CDIPC initial threshold of $65,000):
Family Member
Certificate Holder
Spouse
Child
Allocations
Paid Claims
Amount
A) “Direct” plan
sponsor claims
experience
B) Amount flowing to
insurer’s EP3 pool
C) Amount flowing to
CDIPC industry pool
[ with CDIPC ongoing threshold
@ $32.5K ]
$300
$300
$0
$0
$102,000
$9,700
$22,500
$69,800
$50
$0
$0
$50
$102,350
$10,000
$22,500
$72,350 @ 85% =
$61,498
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Value derived from CDIPC’s
presence
 Greater viability for insured plans in affording the impacts from catastrophic
drug costs.
 A means to improve the degree of predictability of impact risk from
reoccurring catastrophic drug claims.
 Evolving abilities to capture, trend, and share anonymous industry wide
catastrophic drug information.
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What CDIPC is not
 A vehicle to grow the number of plans that come to market.
 A means to neutralize drug cost growth. Insurers still need to plan
and price for:
•
•
•
•
EP3 designs, plans and experience (dollars less than CDIPC pooling level)
Costs in excess of annual per certificate maximums
15% not covered in industry pool (above pool level up to certificate maximum)
Annual contributions to industry pool if they are a “payer” into the pool.
 A set of standards or guidelines applied to refund and ASO business.
 An instrument for insurers to reduce high cost drug prices through
purchasing power.
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What CDIPC is not
 A means to control or neutralize inflationary growth, utilization, and
costs of expensive and new drugs.
• Pooling charges will continue to grow at a rate exceeding inflation.
From / to
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CDIPC’s Successes
 CDIPC is now in its 4th operating year of pooling.
 For insured plans, the program is helping insurers and employers manage
catastrophic drug costs and maintain plan affordability as evidenced by:
Measure
2013
2014
$1,327.9M
$170.3M
$1,379.9M
$189.0M
$16.3M
$24.5M
$8.9M
$13.0M
4,205
4,018
190
262
# of certificates appearing in 2013 and 2014 pools
144
144
# of “leading” drugs in the pool
42
51
-
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Total paid drug claims from fully insured plans
Claims where certificate's drugs exceed initial threshold of $25K
in 2013 and $27.5K in 2014
Claims from certificates qualified for pooling
(2 or more yrs greater initial threshold –or- 2 yrs greater than initial threshold
and subsequent yrs greater than initial threshold)
CDIPC pool shared by insurers from qualified claims
# of certificates exceeding initial threshold
# of certificates in pool
# of new “leading” drugs in the pool
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Snapshot of drug trend:
“Leading” Drugs pooled by CDIPC
Zelboraf
Kalydeco
• hitting
A biologic
drug approved
• Another new drug
the pool.
Approved by
by Health
Health Canada Feb. 15
Canada
Nov 12,melanoma.
2013 for treatment
of
2012. Used in treatment
of on
late-stage
The treatment
is one
specific
gene
mutation
in is
Cystic
which doesn’t reallya bring
about
emission
but
used Fibrosis
more as an extension
patients. This mutation occurs in 4-5% of
of life drug (2-18 months).
Fibrosis
cases.
• The annual cost forCystic
treatment
for certificates
with Zelboraf was $45K in
• 2013/2014.
Cost in Canada
for persons
withof
Kalydeco
2012, $63-68K in
It represents
$100K
cost to the pool (2
their principle
drug
is $355,000
persons). Low # ofas
certificates
due to
morbidity
rates yearly.
and in 2012 (under
• CDIPC’s
pool
grew
by EP3
$4.1M
in 2014.
CDIPC qualification
threshold
(but
hitting
pools).
39%
of this was
growth
was
fromtested
Kalydeco.
• After being released,
Zelboraf
also
being
in combination with
• Due
to Kalydeco,
CDIPC expects
pool
another cancer drug;
Cotellic
(aka Cobimetinib).
Thethe
FDA
approved this
will2015,
grow by
at least
$0.75M
in 2015. 22, 2016. Cotellic
treatment on Nov 15,
Health
Canada
on February
in combination with Zelboraf costs about $184K (USD) per year.
• CDIPC impact is that in 2017 pooling of Cotellic with the cost of Zelboraf
being imbedded in the Cotellic costs. Most, if not all, of Zelboraf drugs will
be removed from CDIPC’s pooling list. With improved prognosis and
greater chances of remission or at least “regression” there will likely be
more prescriptions written for the Zelboraf/Cotellic combination than for
Zebloraf itself.
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CDIPC’s challenges &
opportunities
 Continue to improve communications to and from the advisor/broker
communities.
 Data mining: 3 (soon to be 4) years of data to:
• More quantitatively identify inflationary trends and pressures.
• Reinforce delivery on guiding principles.
 Better communication around expectations regarding pooling
experience “asks” during marketings.
 Undertake tracking and reporting on plan marketings on a go forward
basis.
 Better ways to tell story around increases to pooling charges at
renewal.
 ASO & Refund: From strategic review - off table for now
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