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Plan Performance -Executive Summary -

Municipal P ension Plan of British Columbia Plan Performance Review™ Executive Summary Table
PLAN PERFORMANCE
PERFORMANCE
Latest 24 Month Trending
FV SAVINGS
36 MONTHS ¹
General Plan Metrics Total Plan Spending  Total Amount Paid ($) by Plan  Total Number of Claims Paid  Average Total Amount Eligible / LO: $2,519,096.04 HI: $4,585,052.80 Total Number of Claims  Average Amount Paid / Claim 3  Total Number of Claimants  Average Age (Years) 4  Average Number of Claims / Claimant Generic Penetration Rate Generic Penetration Rate Impact of Specialty Drugs Claims - % of total plan spending Potential plan savings with a Therapeutic Substitution Program Maintenance Drug (MD) Claims Specialty Spending (% of Total)  Impact of excess dispensing fees for suboptimal refil s  Average days supply Subtotal, Opportunity for Plan Savings
Average Days Supply (MD) Subtotal, Opportunity for Plan Savings
over next 36 months
Above Average / Good Performance Average Performance Below Average / Poor Performance FV Savings 36 Months = the estimated future value of savings with plan design changes over the first 36 months (three years) fol owing this analysis 2 Total Amount Eligible is after coordination of benefits for the data coming for Group E088000 which represents 98% of al claims and spending. 3 Average Amount Paid per claim by the plan after al plan member cost-sharing and coordination of benefits with other plans as first payers.

Municipal Pension Plan of British Columbia Plan Performance Review™ Key Findings
MPPBC's overal plan spending grew by only 2.4% from Year 1 to Year 3 to $45,416,220.29, despite an increase in claimants and claims of 11.3% and 14.8%, respectively, over the same period (Table 1). Given that the contributions from the plan and its members towards submitted claim costs have remained consistent year-over-year-over-year, this finding can be attributed to the growing utilization and decreasing prices of cost-effective generic products: • The generic penetration rate (GPR) (i.e. utilization of generic drugs by number of claims) within the MPPBC plan grew from 60.3% to 65.8%from Year 1 to Year 3 – a rate 14.2% above the national average in Year 3 (Figure 3). The majority of growth occurred from Year 1 to Year 2, and slowed considerably from Year 2 to Year 3. • A number of commonly used brand products came off patent during this period (e.g. Crestor®, Diovan®). • The average amount paid by MPPBC for a generic claim decreased by 13.7% from Year 1 to Year 3 to $19.35 A common concern amongst retiree plans is the growth in utilization of drugs treating Age-Related Chronic Conditions (ARCC). However, MPPBC's overal experience within these areas appears to be saturated (Tables 22 and 23). • Surprisingly, within ARCC, the number of claims for drugs treating Elevated Cholesterol was below the national average. Combined with the finding that only 63.3% of claimants treating Elevated Cholesterol were adherent with their therapy (Figure 8),this may suggest this area is not being adequately managed for MPPBC plan members, potential y leading to adverse health events (e.g. strokes and heart attacks) . Going forward, MPPBC is facing several growing cost pressures which are unlikely to be offset by the new round of generic price decreases set to take effect April 1, 2014 in British Columbia. These cost pressures include: • Specialty Drug Claims: Although MPPBC's spending for expensive specialty drugs remained below average in
Year 3 (Table 6) – which can be attributed to a significant degree to BC's generous public coverage for these
products– this area has grown by 44.7% or $1,006,720.01 over the three-year period. The rate of growth in
specialty drug costs was nearly 19 times the rate observed for the plan as a whole.
o Over 68% of specialty spending in Year 3, or $2,233,305.23, was attributed to claims for chronic therapies, costs which are expected to recur annual y (Table 8). o The major therapeutic areas driving the growth in specialty spending for MPPBC were Cancer, Osteoporosis and Age-Related Macular Degeneration – combined these areas represented $859,073.38 or 85.3% of the total increase in specialty costs. • Non-Benefit claims under the BC PharmaCare formulary: From Year 1 to Year 3, the amount and number of
claims paid for Non-Benefit claims increased by $2,405,851.52 (or 28.6%) and 28,023 (or 26.3%), respectively (Table 20). This is a concerning trend as these products wil not be subject to cost sheltering from coordination of benefits (COB) with the public plan. o The number of claimants for these products and the number of unique DINs/PINs paid by the plan have been growing year-over-year-over-year by 18% and 25%, respectively. o In Year 3, the therapeutic areas driving this growth were Elevated Blood Sugar, Stomach Hyperacidity, Neurological Pain, Elevated Cholesterol and Depression – the top drugs within these classes, Victoza®, generic Nexium®, Lyrica® (and generics), Ezetrol® and Cymbalta® and Pristiq® comprised

Municipal Pension Plan of British Columbia Plan Performance Review™ $3,197,250.58 or 30% of all Non-Benefit spending. o In Year 3, specialty products were another key driver of costs for Non-Benefit products which included newer oral chemotherapies (which may be eligible for coverage under the BC Cancer Agency such as Xalkori® and Xtandi®) and injectable products for Age-Related Macular Degeneration (Lucentis®). • Changes in pharmacy submitting behaviours: In order to offset lost revenues from lower generic prices,
there is a financial incentive for pharmacies to submit higher-markups on ingredient costs, and to try and recoup revenues through more frequent dispensing of Maintenance Drugs (MD) to drive a greater number of fees: o Higher mark-ups on ingredient costs: The average submitted mark-ups on ingredient costs have increased consistently from Year 1 to Year 3, reaching an average of MLP + 16.1% for a brand claim, and MLP + 23.4% for a generic claim (Table 21). o Growth in refil s with shorter durations for Maintenance Drugs (MD): The rate of monthly fil s has shifted upwards from 18.6% of al MD claims in Year 1 to 20.4% in Year 3 (Figure 4). Current plan design features such as limits on pricing and refil frequencies, which would reduce the impact of some of the above cost pressures, as well as the exclusion from coverage of certain drug categories, are unlikely to provide sufficient protection to the plan going forward. Due to the absence of key data fields in the raw, transactional-level claims data, it was not possible to elucidate the specific impact of the following plan provisions on cost-containment: • Impact of Current Plan Design on the Claims Experience: Although rejected claims comprised 13.5%, 14.7%
and 15.3% of the total amounts submitted in each of Years 1, 2 and 3 (Tables 15, 16 and 17), respectively, savings to the plan are likely to be significantly less, contingent on the reason for the rejection (i.e. date of birth errors, etc.) and subsequent coverage of SA products initial y rejected as ineligible for coverage. o However, there were several key categories which appeared to be actively managed through plan design provisions including Sexual Dysfunction Treatments, Vaccines, Vitamins and Minerals and Smoking Cessation Treatments. Together, these categories sheltered the plan from up to $1,655,761.93 (or 1.8%) of the total amounts submitted in Year 3. • COB and Pricing Limitations: Combined, COB and pricing limitations (i.e. dispensing fees and ingredient costs)
shielded the plan from 27% of submitted amounts (Table 1) however, their individual impact could not be determined. To ensure the sustainability of the plan moving forward, MPPBC may wish to consider implementing additional plan management strategies that do not adversely affect the value of the benefit for plan members. Some options include: • Expanding reference based pricing (RDP) for additional drug classes: A therapeutic substitution program for four (4) additional drug classes could have saved the plan up to $2,458,847.18 (or 5.4% of total plan spending) in
Year 3 (Table 5).
• Optimizing refil s for maintenance drugs (MD): MPPBC could save an estimated $489,529.38 to $977,094.09
(or 1.1% to 2.2%) of total plan spending by further optimizing the refil quantities for maintenance drugs
(Figure 4).
• Ensuring that reimbursement for SA claims is only provided for approved indications.

1. Executive Summary

1.1 Project Mandate

1.2 Claims Data

2. Plan Performance Considerations

2.1 General Plan Metrics

2.2 Claiming Population Profile

2.3 Drug Type Utilization & Generic Penetration

2.4 Therapeutic Substitution

2.5 Specialty Drugs Analysis

2.6 High Users Analysis

2.7 Therapeutic Plan Limits

2.7.1 Narcotic Utilization Review

2.7.2 Controlled Drugs Utilization Review

2.7.3 Migraine Medication Utilization Review

2.7 Maintenance Drugs & Excess Dispensing Fees

3. Impact of Current Plan Design on Cost Containment

3.1 Rejected Claims Analysis

3.1.2 Key Findings

3.2 Impact of the BC PharmaCare Formulary

3.3 Drug Claims Pricing Analysis

4. Age-Related Chronic Conditions

5. Adherence with Therapy

5.1 Overall Adherence

5.2 High Blood Pressure

5.3 Elevated Cholesterol

5.4 Definitions

6. Data & Analysis Notes

6.1 Benchmarks

6.2 Data Limitations

7. Appendix A – Supporting Tables & Figures

7.1 Transaction Summary

7.2 Adherence Claimants

8. Glossary of Terms

Source: http://www.pensionsbc.ca/portal/page/portal/3AB06BC652F969F3E05078CE1270216C