Only 11% of sponsors grasp how their drug plan affects employee health, iA finds
Eighty-one percent of Canadian plan sponsors assess drug plan success on spending alone, while only 11 percent say they have a good understanding of how their plan affects their employees’ health.
A white paper from iA Financial Group, citing a survey published by Benefits Canada, argues that claim rates give sponsors only a partial view and make it impossible to link spending to actual outcomes.
Nearly all plan sponsors, 95 percent, receive analyses of their plans but have difficulty linking the findings to desired health outcomes.
It also found 91 percent rely on advisors to stay up to date and 79 percent consider advisors their most reliable source of information.
Indexed drug spend per plan member rose from 100 in 2021 to 106 in 2022, 117 in 2023, 123 in 2024 and 132 in 2025, iA reports using annual industry data from Express Scripts Canada. That is a cumulative increase of 32.5 percent per member and an average annual growth rate of 7.2 percent.
The 2025 Cost Drivers Report from Innovative Medicines Canada, cited in the paper, puts compound annual growth in private plan drug costs at 6.2 percent from 2015 to 2024.
Every $100 spent on medications in 2014 rose to about $183 in 2024 in today’s dollars.
About 60 percent of the cost increase stems from greater medication use, the remaining 40 percent from a higher average amount per claim.
The number of members using specialty drugs rose 19.7 percent in 2025, and specialty drugs accounted for about 32 percent of plan spending that year.
Chronic diseases alone account for 72 percent of private drug plan spending, and private plans largely cover people aged 25 to 64.
Total medication spending rose 7.3 percent in 2025, driven by drugs for diabetes and obesity, including GLP-1 drugs, as well as inflammatory diseases and cancer.
The share of private plan spending devoted to weight-management medications rose 275 percent between 2018 and 2024.
About half of people with chronic conditions in Canada do not follow their treatment plans as prescribed, iA states, citing the OECD’s Health at a Glance 2023.
Treatment cost and accessibility are among the main obstacles.
Drawing on internal data on 2025 disability claims, iA attributes approximately 3 percent of short-term disability claims and 4.5 percent of long-term disability claims to obesity or its comorbidities.
Good diabetes treatment adherence results in 3.7 fewer days of short-term disability per year.
Mental health costs in Canada amount to $180bn annually, of which approximately $110bn is borne by employers, citing CSA Group’s 2026 report.
Lack of obesity treatment costs $27.6bn a year, $21.7bn of it borne by employers, with fewer than 20 percent of insured individuals having access to approved treatments.
Menopause accounts for 540,000 workdays lost per year.
iA sets out biosimilars, where Canadian use has produced savings of more than 50 percent on most high-volume biologic drugs; step therapy for specialty drugs; and managing therapeutic classes such as GLP-1 through prior authorization, differentiation by indication, and monitoring of off-label use.
Access to treatment and cost management go hand in hand, the paper states.
Federal data on the same market is available through the Patented Medicine Prices Review Board’s private drug plan expenditure report.
