Prescribers/Healthcare Practitioners and Prior Authorization

Why is the prior authorization designation used?

It can be challenging to appreciate why insurers and pharmacy benefit managers (payers) require prior authorization (PA) for so many drugs, typically specialty drugs (drugs over $10,000 annually per patient). Although specialty drug claims make up only a small portion of the number of total drug claims submitted under group benefit plans, specialty drugs make up an increasing amount of total drug claims and expenditure for employers and other sponsors of group benefit plans. In 2022, two important reports concluded that specialty drug spending in Canada has increased as a percentage of overall drug expenditures:

Express Scripts Canada reported that specialty drugs made up only 0.9% of total claims, but that they accounted for 29% of total drug spend in group drug plans, up 6.8% from the previous year.

TELUS Health reported that specialty drugs made up 34% of the total eligible amount despite only making up 1.4% of total claims.

Assuming these trends continue, TELUS Health predicts that by 2026, specialty drugs will account for almost half of the average eligible amount per certificate.

It is common for insurers to restrict access to these drugs so that only plan members with a specific medical history, disease profile, or those who have tried and failed to respond to other less expensive therapies, have access to more expensive drugs.

Prior authorization is in place to ensure that the medication prescribed is necessary and appropriate, i.e., either there are no suitable lower-cost alternatives available, or all other lower-cost alternatives have already been explored. This ensures overall healthcare costs are managed and allows employers and plan sponsors to continue offering coverage for specialty drugs. Because the number of specialty drugs is increasing, the prior authorization process will become more commonplace and will apply to more drugs prescribed. Prior authorization is also used by public drug plans funded by provinces usually referred to as special authorization.

How do I know if the medication I am prescribing requires prior authorization?

The drug you have prescribed to a patient is probably a specialty drug requiring prior authorization if one or more of the following applies:

If the drug is not immediately available to a patient because they must try another, usually less expensive medication first then the prescription is probably for a specialty drug or a drug that requires prior authorization.
If both you and your patient must complete a claim form(s) and provide medical evidence to support your claim before the patient’s insurer will consider reimbursement of the drug(s).

If you are unsure if the drug you are prescribing or dispensing will require prior authorization, often insurance companies or pharmacy benefit managers (payers) will have a prior authorization drug list on their website for drugs that require prior authorization. Some may include the required claim forms that can be printed for your use, but others may not.

Physician, Prescriber or Pharmacist