By the Numbers: Private Payers and Specialty Pharmaceuticals

Written by Allison Wills

April 18, 2022

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The specialty pharmaceutical sector, which caters to patients with complex conditions requiring sophisticated and often costly treatments, depends on private payers to survive and thrive – and the private-payer commitment keeps growing.

Private Payer Landscape in Canada

70%: Proportion of Canadians with private/supplementary health insurance – that’s 26 million people.1

100K+: Number of private drug benefit plans, usually offered as employment benefits but also available for direct sale to individuals.2

36.9%: Share of total drug-spend carried by private payers, approaching the 43.6% funded by the public system.3 In the US, private payers absorb a very similar proportion (42%) of drug costs, challenging the notion that Canada leans far more heavily on the public purse.4

$12.7B: Cumulative cost of prescription drugs covered by private plans in 2021.1

Private Payers and Specialty Drugs

32%: Total private payer drug costs devoted to specialty drugs – approximately $4B as of early 2021.5 These costs are associated with just 1.3% of patients.6

8.7%: Increase in specialty drug spend in the private payer space in 2020,5, more than 6 times the increase (1.3%) in conventional drug expenditures.6

2.5%: Increase in the cost per private payer claim for a specialty drug in 2020. In contrast, the average cost of a traditional drug claim decreased by 0.8% during this period.5

Specialty Therapeutic Areas Covered by Private Payers

44.4%: Proportion of costs devoted to rheumatoid arthritis, inflammatory bowel disease, and psoriasis among the top 1% of high-cost private payer claims in 2021.6

80%: Share of oncology drug costs allotted to oral medications within the private payer sphere – significantly higher than the overall figure of 50% in Canada.7

100% Double: Increase in the cost per oncology drug claim in private plans between 2010 and 2019, compared to just 5% for non-oncology drugs.7

> 50%: Proportion of oncology drugs in the pipeline designed for oral administration.8

> $650M: Amount paid out by insurers to cover rare disease drugs in 2020.1

32%: Growth in private payer expenditures for rare disease drugs in Canada between 2012 and 2019.1

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References

  1. Mirror, mirror 2021: reflecting poorly. A report by the Commonwealth Fund, Aug. 4, 2021. https://www.commonwealthfund.org/publications/fund-reports/2021/aug/mirror-mirror-2021-reflecting-poorly#rank

  2. OECD interactive tool: International comparisons – peer countries. CIHI. https://www.cihi.ca/en/oecd-interactive-tool-international-comparisons-peer-countries-canada

  3. Hoskyn SL. Explaining public reimbursement delays for new medicines for Canadian patients. Innovative medicines Canada.

  4. Cancer Can’t Wait Virtual Action webinar, week #2. Canadian Cancer Survivor Network. Dec. 9, 2021.

  5. COVID-19 expected to push Canada’s health spending beyond $300 billion in 2021. CIHI. Nov. 4, 2021. https://www.cihi.ca/en/covid-19-expected-to-push-canadas-health-spending-beyond-300-billion-in-2021

  6. U of T researchers to help form Coronavirus Variants Rapid Response Network. U of T News. March 29, 2021. https://www.utoronto.ca/news/u-t-researchers-help-form-national-coronavirus-variants-rapid-response-network

  7. Health Canada authorizes the first Covid-19 vaccine. Government of Canada. Dec. 9, 2021. https://www.canada.ca/en/health-canada/news/2020/12/health-canada-authorizes-first-covid-19-vaccine0.html

  8. Aiello R. Historic moment: Health Canada approves Pfizer Covid-19 vaccine. CTV News. Dec. 9, 2021. https://www.ctvnews.ca/health/coronavirus/historic-moment-health-canada-approves-pfizer-covid-19-vaccine-1.5223477

  9. Covid-19 vaccination in Canada: vaccination coverage. Government of Canada. Last updated Nov. 26, 2021, with data up to Nov. 20. https://health-infobase.canada.ca/covid-19/vaccination-coverage/

  10. 2021 national survey of Canadian physicians. Canadian Health Infoway. Aug. 9, 2021. https://www.infoway-inforoute.ca/en/component/edocman/resources/reports/benefits-evaluation/3935-2021-national-survey-of-canadian-physicians

  11. McGillion MH et al. Post-discharge after surgery Virtual Care with Remote Automated Monitoring-1 (PVC-RAM-1) technology versus standard care: randomised controlled trial. BMJ 2021;374:n2209.

  12. Consumer engagement with digital is shifting. Data from STI.

  13. Magalon T et al. Predicted long-term impact of COVID-19 pandemic-related care delays on cancer incidence and mortality in Canada. MedRxiv preprint, Aug. 28, 2021. https://www.medrxiv.org/content/10.1101/2021.08.26.21261149v1.

  14. Letter to the Canadian Government. Canadian Association of Rare Diseases. April 26, 2021. http://www.raredisorders.ca/content/uploads/CORD-PM-MOH-Rare-Drug-Strategy-0422021v2.pdf

Allison Wills
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