Sonya Felix. Benefits Canada. Volume 22, Issue 8. September 1998.
Ever since Pfizer’s erectile disfunction drug Viagra hit the U.S. market last April, plan sponsors and insurers have been watching outcomes carefully. Against the backdrop of a media blitz on this tiny, blue wonder drug, the impending approval of the drug by Health Canada raises some serious issues for the benefits industry.
To get a sense of what people think about the most talked-about drug in years, regular Benefits Canada contributor Sonya Felix spoke with consultants, insurers and employers about the implications Viagra will have for the Canadian market.
As you’ll notice, it was tough to get employers to talk “on the record” about Viagra. Many of the plan sponsors interviewed for this story still haven’t decided whether they’ll cover the drug, and of those who have decided not to, none were willing to talk publicly about that choice. Comments ranged from: “If you print that we don’t want to cover Viagra the union will go nuts and I’ll lose my job,” to “What we’re hoping to do is quietly exclude it and wait and see if the shit hits the fan.” Indeed.
By all accounts, the issues surrounding Viagra aren’t likely to go away for quite awhile. And we’re pleased to get the discussion started with our first official look at this new drug. Participants who did agree to talk to us about Viagra include: Fred Holmes, a principal with Towers Perrin in Toronto; Andrew Yorke, chief operating officer of Ontario Blue Cross in Toronto; Ron Gathercole, director of corporate relations for Blue Cross of Atlantic Canada in Moncton; Chris Bonnett, director of healthcare business development for Sun Life of Canada in Toronto; Jim Norton, senior healthcare consultant for Watson Wyatt Worldwide in Toronto; Doug Grant, director of managed care business development for Pfizer Canada in Montreal; Linda Hughes, director of marketing and client services at ESI Canada in Mississauga, Ont.; Barry Noble, national director of managed care at Manulife Financial in Waterloo, Ont.; and Vic Clive, vice-president of human resources for Canada Trust in Toronto.
Why has Viagra raised such a furor?
Holmes: One of the most critical issues we’re facing, bar none, is the impact that Viagra-type drugs will have on the industry. It’s the first in a new wave of drugs in a therapeutic class for which there have been no prior drugs and it’s the leading edge drug targeted primarily at baby boomers. How do we come to grips with continuing unrestricted formularies given that these new drugs aren’t substitute drugs?
Yorke: In some ways Viagra is similar to when nicotine patches came out and the insurance industry got hit heavily. Insurers are afraid because pricing is tight as it is. There isn’t much room for an additional burst in cost when we’re already in a low margin business and Viagra will be a direct hit to the bottom line.
Gathercole: The cost factor is one thing, but there are a number of other thorny issues. How do you deal with a 24-year-old diabetic or a 50-year-old male with prostate problems? Although the drug is only for males, we’ve had discussions where there were a number of female employees present and we’ve said imagine you can never be intimate with your husband again. That puts it in a different perspective.
Bonnett: While Viagra certainly taps into people’s fascination with things sexual, it also represents a combination of factors that defy easy resolution. The most direct and obvious of these is its cost and the debate around the status of the health condition it treats. Perhaps most important, Viagra is just one example of many similar emerging coverage dilemmas.
Norton: Viagra is only one of a number of drugs coming in the next year that are expensive and are questionable whether they are lifestyle type drugs or medical necessities. Another drug coming down the shute is for osteoporosis. There’s some concern that everyone will want to take it to prevent osteoporosis even though it is usually possible to determine which men or women are at risk.
It is estimated that a yearly prescription for Viagra in Canada will cost about $1,200. Considering there are 3.6 million potential users in Canada, how expensive could Viagra be for insurers and plan sponsors?
Grant: Within the 3.6 million Canadian men with erectile dysfunction there are mild, moderate and severe cases and it’s hard to say what percentage each group represents. The rate varies in different age bands. Since Viagra was launched in the U.S. less than 10% of potential users have actually used the drug. If you look at the numbers in Canada, 10% would be about 360,000 people distributed across the country. How expensive this will be for group plans will depend on the percentage of males versus females in the particular workforce and the age bands. The estimated added cost to drug plans is in the 1% to 5% range.
Hughes: Pfizer and IMS America are saying we can expect a 1% increase in overall drug spending, but I worry that groups in the Canadian market will be more affected than 1%. Some companies have a retiree population equal to or greater than their workforce. The implications for these companies may be greater than in the U.S. since Canadian employers tend to look after their employees for life.
Holmes: The cost could be trivial if it isn’t an old group, but if it is, Viagra could represent 15% to 20% of a drug plan’s annual cost. I think the 1% figure is a misnomer. For groups below the baby boomer age, such as high-tech companies, cost won’t be significant and 1% might apply. But for the older manufacturing sector where the average employee is a male of 48 or 50, the impact will be huge.
Noble: Some of the estimated risk factors I’ve heard are ludicrous. People are looking at the incidence of erectile dysfunction in the population and extrapolating based on who they think might use the drug. Estimates of 15% to 20% only make sense if all potential users actually use the drug. But this hasn’t been the case in the U.S., where there’s been less than 10% utilization. Although Viagra is considered a very successful drug in the U.S., there’s been only a 1.5% increase in total drug spending.
Bonnett: Sun Life is currently estimating cost increases as high as 8% to 10% of medical premiums, on average, based on targeted populations within group plans. However, this number will be influenced by many factors such as coverage for retirees, the portion of those with the condition that are actually prescribed and continue to use the medication over time, and whether the sensitive nature of the product may deter some plan members from making a claim.
Employers have a number of options available for dealing with the projected costs of Viagra. One option is to cover the drug entirely and another is to deny coverage. Is delisting a viable option?
Holmes: To refuse to cover Viagra is dangerous. Under dearly stated employment standards employers can’t discriminate drugs by gender and this arena is increasingly under scrutiny by the legal profession. The only angle employers have is to move Viagra back to the therapeutic class of sexual dysfunction drugs. But I think that will only hold water until the legal professionals get hold of it.
Norton: If a plan says no to Viagra it would probably be considered discriminatory under employment standards law, which says denial of any drug for one sex is discriminatory. It is possible to discriminate against an entire class of drugs that is meant for both males and females. At this point, Viagra is being compared to birth control pills which are exclusively for females and are paid for by most if not all plans.
Noble: I don’t think delisting is the right position. A lot of companies are saying they don’t want to cover Viagra and some are checking with legal counsel to see if they can delist it. As insurers delist Viagra, employers will ask where they’re getting the information to make that decision.
Yorke: One of the options I suggest for groups is to not cover Viagra unless the client pays an extra premium. When Viagra becomes available in Canada, we won’t be adding it to our formularies. Although you can’t discriminate within existing classes, you could deny coverage of Viagra if it is put in a new class of therapeutic drugs.
Bonnett: Current policy wording which speaks of reimbursing “treatment of an illness” and “only available with a physician prescription” in most of today’s plans makes outright delisting risky for plan sponsors. With similar situations emerging in both drug and non-drug treatments, the need for a thorough review of benefits policy and the contract wording will become more pressing.
If employers can’t deny coverage, can they restrict coverage by setting a limit on the number of pills they will pay for?
Noble: One option employers have is to limit what they’ll cover based on a reasonable and customary monthly basis. But this could open the door for employees to complain. You can say you’ll cover what’s reasonable and the employee can buy the rest himself. No one is saying that’s all a person can have, just all the drug plan will pay for.
Holmes: As far as setting caps on the number of pills, then you start getting into the bedrooms of your employees. Do we want to ask the question how many times a person has sex in a month?
Hughes: The fact is that drug plans and major medical plans are not really designed to cover all expectations but employees expect that employers should cover it all. Employers could meet employees halfway on costs. There could be more creativity in the way drugs are covered—higher coinsurance paid for certain drugs that are absolutely vital and lower co-insurance for drugs considered more for lifestyle.
Clive: Why restrict Viagra in any fashion? You’ll have to communicate the rationale to employees and they’ll ask why six and not 30 pills per month. My position for controlling this thing is for a national pharmacare scheme. Then these discussions would be between the electoral and the elected instead of between employee and employer.
What about prior authorization as an option?
Noble: Another way to deal with Viagra is to require employees to get more than a script from their doctor for coverage. They’d need a medical form filled out to show need. The process would weed out claims without a medical basis. But, it’s a hassle for people to go back to their doctor and who pays for the form to be filled out?
Gathercole: Since a lot of disease states make good candidates for Viagra, there would be a good chance that many people wouldn’t need authorization. For instance, a 40-year-old man taking diabetic medication could have erectile dysfunction and not need pre-authorization, but a 24-year-old not taking any medication might need pre-authorization to get coverage for Viagra.
Holmes: Pre-authorization isn’t a popular option. What’s the precedent? Are we saying we don’t believe the prescribing doctor? That’s going to cause problems.
Norton: I prefer prior authorization over setting a limit on the number of pills. Other drugs aren’t limited to six pills per month. And, high co-pays impact on lower income employees. With prior authorization you wouldn’t exclude Viagra but only pay for it if someone really needs it.
Bonnett: Quebec clients will be required to follow the listing decision from the RAMQ [Regie de L’assurance Maladie du Quebec] when it is made public. Outside this legislated mandate, only our pay-direct National Formulary plan will provide any special authorization provision. Standard group plans are unable to support individual consideration.
There is a lot of debate about whether Viagra is a lifestyle drug or a medical necessity. How is this affecting decisions about coverage?
Noble: Viagra is in the next category beyond simple lifestyle drugs. I think people’s position in this debate shows their attitude to sex. Is sexual intercourse a necessary function and important to quality of life? If someone couldn’t urinate we wouldn’t balk at paying for a drug to help them.
Yorke: Everyone has a different opinion on whether Viagra is a medical necessity. A person could say their impotence made them depressed and they’d have to go on disability without Viagra. But, I think people would be willing to pay for it themselves—it’s about the price of going for a beer.
Grant: For the sake of ease a lot of people are putting Viagra under lifestyle. I think people suffering from impotence would have a different attitude. People need a lot of eye-opening about how much incidence there is of the diseases that can cause erectile dysfunction. The cardiovascular system needs to be fully functioning to allow the veins in the to dilate with blood. Viagra restores dignity to people.
Hughes: Prior to attending a presentation by Pfizer, I think many of us viewed Viagra as a lifestyle drug. But after hearing representatives from Pfizer talk, people left seeing it as a medical issue. Male impotence is so connected to other health issues. Yet, for many people it’s a still a dilemma whether or not to consider Viagra a lifestyle issue. We’re helping companies to look at the cost implications and the medical evidence [for] why the drug exists.
Bonnet: The debate will never be resolved because the answer is personal. If abuse is minimized, then the drug can be used for its intended purpose of treating a medical condition. Many people who have not recognized the medical need may have an overwhelming mandate to control costs. We will be asking clients about the value the benefits package brings to the organization and the quality of life aspects important to the patient.
What can Canadian companies learn from the U.S. experience with Viagra?
Noble: IMS Canada is doing a week-by-week analysis so we can see what the trend is. Some people say the U.S. might be showing a particular trend, but they’re covering drugs like Claritin, which isn’t covered in Canada. So some are suggesting it’s a different database of drugs and will show different total drug spending. But if you take each therapeutic class separately, there are similarities. Drugs within the class may vary, but at the end of the day the spending is similar. Viagra is a therapeutic class of one and if you can track that in the States, then the numbers can be translated back to Canada.
Hughes: In the U.S. we’re seeing a lot of HMOs decide to exclude Viagra and now they’re catching a lot of flack as it goes through the courts. The jury is still out as to whether they can outright exclude Viagra.
Bonnett: The U.S. experience has been instructive, but as in all things to do with health, the situation there is also different here. In Canada, our fragmented patchwork of healthcare funding and delivery discourages big picture thinking. Few employers have internal resources to assess the value of medicines funded by their health plans. Perhaps the best thing we can learn from the U.S. is a very old message: Be prepared. There’s much more of this ahead.
One of the concerns about Viagra is the possibility for abuse, such as people getting a company-paid prescription and then selling the pills on the black market. Do you think these fears are justified?
Grant: There’s no way for us to say there won’t be abuse since some people will try Viagra and be completely disappointed. It doesn’t increase libido and isn’t for prolongation or enhancement. Obviously there will be some abuse but no different than with any other drugs available like antibiotics.
Gathercole: There was a story in the media about a guy from New York who’d been to a party, took Viagra (although he wasn’t impotent and didn’t have a prescription) and claimed he had an incredible sexual experience. The scary part is this guy would go back to work and tell his fellow workers about how great Viagra is. Yes, there’s the physical side that says Viagra only works if there’s a physiological problem, but the psyche is another matter. That’s the side of the coin that Pfizer has to worry about.
Noble: A huge black market exists for Viagra and if there are no control mechanisms people can get it through their drug plans to sell for a profit. That’s one of the reasons for putting a limit of six to eight pills on monthly scripts. If the person doesn’t have erectile dysfunction they can still go to their doctor and say they can’t get an erection and would like to have 25 pills per month. Is the doctor going to ask for them to prove impotency? But, if they can’t prove co-morbidity with another disease then the drug plan might not approve coverage. Setting such limits isn’t managing quality of care, just abuse.
Bonnett: To mitigate the chances of abuse, physicians will have to counsel patients, enable informed dialogue and then prescribe very carefully. Pharmacists will have to ensure discreet counselling in concert with the doctor. Patients will have to be responsible for how they use this medicine. Importantly, the manufacturer will have to be very responsive to emerging market conditions post-launch, and continue to work with interested parties to properly and effectively manage this drug.