Toromont Industries Ltd., a construction equipment business with about 3,500 employees, has been on a long journey to revamp its drug plan after it noticed its benefits costs were increasing quickly several years ago.

“Our plan at the time was a pretty simple gold-plated plan. Whatever you wished to obtain, you’re good, but you’re paying a $9 deductible per script,” said David Wetherald, vice-president of human resources and legal and corporate secretary at Toromont Industries.

“Across the board, we were covering anything and everything. There was no incentive for employees to act as good consumers within our plan.”

In embarking on its changes, Toromont wanted to sustain its drug plan, maintain choice and continue to offer 100 per cent coverage. “We thought this was really important, from a competitive perspective, to attract and retain employees,” said Wetherald.

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It began by implementing a two-tier drug system in 2009. The first tier would include grandfathered brand-name drugs and therapeutic alternatives, including generics, at 100 per cent coverage. The second tier covered brand-name drugs at 80 per cent coverage.

The company used the money it saved from the changes to reinvest in areas such as extra depression care modules in its employee assistance program. It also offered financial incentives for health risk assessments and checkups.

In 2010, Toromont found two preferred pharmacy providers, telling employees that if they shopped there, it would waive the deductible of $9 per prescription.

Over the next couple of years, Toromont was able to support a boost to spending on specialty drugs. “By making changes on the edges, so to speak, we could afford the higher-cost medicines,” said Wetherald.

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But the company continued to monitor its specialty spend, which was increasing, and noticed that overall costs had begun to creep up again. As a result, it decided to implement enhanced mandatory generic substitution, telling employees it would reimburse them only for the cost of the generic. It also implemented a $10 surcharge for purchases of maintenance medications outside of its preferred pharmacy network.

“You look at our specialty drug investment,” said Wetherald. “This is the area that was really driving costs up, because we’ve been doing a decent job of managing the rest of the plan.” As of Jan. 1, the plan was to move to a more rigorous prior authorization requirement.

Wetherald stressed the changes weren’t a one-time effort. “It’s very iterative,” he said. “You have to keep reviewing your data and understand what’s happening in your plan, where are folks choosing wisely and not choosing wisely.”

Copyright © 2021 Transcontinental Media G.P. Originally published on

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