Insurers reluctant to cover vaccinations

By Alain Thériault | June 26 2009 08:02PM

The pharmaceutical industry is arguing that vaccinations can reduce drug consumption within private plans, yet most insurers are reluctant to cover vaccines.

Public plans do not cover all existing and upcoming vaccines equally. The influenza vaccine is covered in Ontario during the fall, for people of all ages. In Quebec, there is no restriction on the vaccination period, but this vaccine is covered only for insured age 60 and over. In Alberta, the vaccination program does not mention this vaccine at all.

In 2005, 30% of employees were insured under a private plan that covered vaccination in Canada, according to data compiled by ESI Canada and Emergis (now Telus Health Solutions). A similar study commissioned by Merck Frosst Canada in 2007 found the same percentage.

Obviously, the pharmaceutical giant has a stake in the game. In 2004, an article entitled Commercial Perspectives: Vaccines, Nosocomial Pathogens, which appeared on the Datamonitor Group website, predicted that the global vaccination market would reach $17 billion by 2010.

How can you persuade group insurance clients who are tightening their belts to add benefits to their plan? As it targets this growth market, Merck Frosst is seriously pondering this question.

Merck Frosst wants to boost participation. It is stepping up initiatives to promote vaccination in private plans.

Louis Rhéaume, Drug Plan Affairs Manager, Quebec at Merck Frosst, says that demand for several kinds of vaccines is expected to grow sharply across Canada. Recent vaccines against influenza and cervical cancer (Gardasil) are already sought after. Other vaccines, like the herpes shot, are eagerly awaited by the population.

At a symposium on vaccination it organized in Montreal early this year, Merck Frosst tried to rally the crowd of 60 insurer representatives to its cause.

One of the speakers, James Mansi, Director, Scientific Affairs, Vaccine Division at Merck Frosst Canada discussed the scope of indirect costs related to illnesses that vaccines could prevent.

Using the example of the herpes vaccine, he explained that the nerve pain that follows this infection can be significant enough to prevent a person from functioning normally.

The list of repercussions is long, whatever the illness, he continued. Loss of productivity, absenteeism, the psychosocial impact of a reduction in recreational activities and enjoyment of life, are just a few examples, not to mention pain, anxiety and the risks of depression triggered by a health problem.

Mr. Mansi also brought up the human papillomavirus, which he called the influenza of sexually transmitted diseases, and its vaccine designed for women, Gardasil. "Awareness and screening have caused disease rates to level off, but have not eradicated the HPV. We have gone as far as we can in terms of prevention. The vaccine is a way to reduce incidence further," he said.

He added that the vaccine against the rotavirus, responsible for most cases of children's gastro-enteritis, could reduce hospitalization by 60%.

Mr. Mansi predicts that the impact of these diseases will abate over time, as more and more people get immunized. At the same time, productivity will increase, along with employee well being, which will fuel the prosperity of businesses and all of society.

Medical doctor, Dr. Marc Lebel also believes vaccines reduce indirect costs and sees vaccination as a means of optimizing employees' health.

The physician points out that some vaccines will not be covered by the government, including those travelers take for hepatitis A, B, typhoid fever and "tourista."

In addition, there is often a long lag between approval of a new vaccine and its inclusion in a provincial program. "The choices are often motivated more by politics than by medical considerations. The government is also focusing on direct costs rather than indirect costs such as reduced productivity and absenteeism." 

If many see vaccination as the panacea to rein in plan costs, insurers point out that their clients are gripping their purse strings more tightly than ever.

Guest speaker Pierre Marion, Senior Director, Sales and Business Relations at Blue Cross Medavie, looks at the pharmaceutical industry's arguments with a dose of skepticism.

Employers must make a decision after considering diverse data: economic imperatives, pressure from unions and from employees, etc.

"The fact is employers do not consider the indirect costs when they decide whether or not to add a particular benefit. They need to see a direct correlation between a treatment and a reduction in absenteeism before going forward, because they do not know the real causes of absenteeism," Mr. Marion says.

Johanne Brosseau, a senior consultant, health management at Aon Consulting, says she is pro-vaccine, but not at any cost. She points out that insurers are facing an emerging problem that will soon compel them to make a decision: to cover or not to cover.

The key to the solution lies in demonstrating the return on investment of vaccination. This hasn't been done yet, "as several existing plan coverages attest," she continues.

"If you decide to cover vaccines, clearly specify the scope of coverage in the contract, and the limits," she advises insurers.

Will the vaccine be covered directly or by a health management account (that provides a fixed amount that employees can use for the health care treatment of their choice)? Will the employees' dependents be included? Will there be a ceiling? What about co-insurance, and in what proportion? Will the minimum amount be established on an annual basis or for life?

She also recommended that insurers not cover vaccines that can be obtained for free in the public sector.

Although employers could opt to share the vaccination costs 50/50 with employees, high co-insurance may have an adverse side effect, she warns. If fewer employees take the vaccine because of the high costs, the vaccination program will be ineffectual.

Université de Montréal (UdM), an employer that has opted to cover vaccines within its plan, sets no limits, plan manager Guy Bélanger confirms. UdM manages its own claims, but has little data on the impact of the vaccination on absenteeism or productivity.

The university has trepidations about the imminent wave of new, highly popular vaccines. It is preparing itself for a review of the insurance contract with the union.

When the first claim for the Gardasil vaccine was filed in 2007, UdM's insurer's first reaction was to propose capping the list of vaccines covered. The institution, 75% of whose employees are unionized, balked at selectively covering vaccines. Also, it is very difficult to trim existing coverage, Mr. Bélanger points out. Instead, UdM set a ceiling.

Of plans that do cover vaccines, most reimburse 80% of the cost, and most have no maximum, Mr. Rhéaume, of Merck Frosst says. With a few limits, vaccination could be integrated in plans without causing costs to explode, he continues.

"There's no need to cover vaccines at 100% or 80%, like many do today. The plan can cover 50% to 60% of the cost of vaccination, or foresee a health management account with a $2,000 limit, for vaccines, eye care and paramedical care," he explains.

He adds that any additional cost generated by covering vaccines within a private plan would be outweighed by the benefits of prevention. "For a plan, reimbursing drugs for employees that come back from a trip with hepatitis B. costs ten times more than covering the vaccine that would prevent this disease."