Sun Life has announced today that they are joining the party started by Great West Life recently of lowering their health care trend factors. Recently GWL dropped their health care trends from 15.5% per year to about 12% per year. Sun Life has just done the same and dropped their trends a similar amount. I fully expect the other carriers to follow suit quickly.
A refresher on what is a trend factor can be found here
Sun Life Press Release
Sun Life is pleased to announce that we are lowering our Extended Health Care (EHC) trend factor used for pricing.
New Trend Factors
Our new trend factors vary based on the plan design, as indicated in this table:
Annual Trend factor for EHC plans No Deductible 11.5% With Deductible 13%
Why are we making these changes?
Sun Life continually reviews our financial experience and emerging practices in the marketplace to ensure our products are priced competitively. We’ve identified a lowering of our actual experience of the EHC benefit as a whole – mainly due to reduced drug spending. The reduction in drug cost is primarily a result of two factors:
- Market changes: As patents on ‘blockbuster’ drugs expire, generic drugs (made with the same active ingredient) replace them at a lower cost. Simultaneously, most provincial governments have legislated lower prices on generic drugs. Together this results in a reduction in overall drug pricing.
- Cost management solutions: In January 2011 Sun Life launched our Provincial Integration program, to ensure that, on a systematic basis, sponsors do not pay for specialty drugs in circumstances where the provinces have created specialty funding opportunities. Additionally, our in-house pharmaceutical team has several new initiatives in development to help sponsors manage their drug spending more pro-actively going forward. Stay tuned for details.
Timing
These new trend factors are applicable to all renewals using an experience period ending on August 31, 2011 or later. Due to the renewal cycle process, these renewals have a renewal notice date on October 31, 2011 or later, and rate effective date on December 1, 2011 or later, depending on the renewal notice period. We are using these new trend factors in our quotes effective immediately.
Questions?
For more information, please contact your Sun Life Financial group benefits representative.
As I mentioned, here, the province of BC has recently struck a new deal on generic drug pricing, this is finally starting to kick in and impact rates. Furthermore, many of the mentioned "blockbuster" drugs are coming off patent, which means generics will soon be available. This is huge news for drugs the likes of Lipitor, the best selling drug ever, which brings in over $11 Billion in revenue per year. Lipitor's patent expired July 19th, 2010 in Canada. A month's supply of "brand name" Lipitor costs about $150, and generics cost about $10 per month.
TL;DR You should start to see health care rates stabilize or at least not increase quite so fast.
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Robert Reynolds, GBA
Certified Group Benefits Advisor
Hendry McKenzie Reynolds Employee Benefits Ltd.
Toll Free: 1-888-592-4614
rob@hmrinsurance.ca
www.hmrinsurance.ca
E.O. E.
