The number of plan members taking drugs for rare diseases (DRDs) costing more than $100,000 in a single year grew by double digits in 2025 and 2024, reports TELUS Health. While they still represent only a relative handful of claims, the fact remains: a single claim can detonate the sustainability of a private drug plan.
“I was at an event last week and one advisor told me that two clients have had a claim, both north of $600,000. They’re struggling to manage it,” says Chris Bonnett, principal, H3 Consulting, and lead author of the 2026 report, The Evolving Landscape of Drugs for Rare Diseases in the Canadian Private Payer Market. Bonnett co-authored the report with Lana Duan, Senior Manager, and Arvind Mani, Managing Director, MORSE Consulting.
In its 2026 Drug Data Trends & National Benchmark analysis, TELUS Health reports that eligible amounts submitted for ultra-high-cost DRDs increased by six per cent in 2025 and by nine per cent in 2024. Their share of the total eligible amount is inching forward, from slightly below five per cent in 2023 to slightly above five per cent in 2025.
Most of that growth came from the number of claimants, which climbed 12 per cent in both of 2025 and 2024. Claimants for ultra-high-cost drugs represented 0.03 per cent of the total in 2025 and the average claimant amount was $190,450.
As captured in the H3/MORSE report, Health Canada approved an average of 14 new DRDs each year between 2019 and 2024 and by the end of 2024, 167 DRDs had been approved. “The drug innovation pipeline is increasingly a rare disease pipeline,” states the report.
Pulling from several years of data from multiple sources, the H3/MORSE report estimated that group insurance providers paid out approximately $659 million for DRDs in 2025. That represents between three and five per cent of all private drug plan costs and about 11 per cent of total DRD spending in Canada.
Take 5 spoke with Bonnett to learn more of the implications of DRDs for small and medium enterprises (SMEs), and possible next actions.
How big a risk do DRDs pose to SMEs?
“SMEs are certainly more vulnerable because they have a lot less tolerance for claim volatility, even if they have drug claim pooling. One DRD claimant will create a meaningful increase in plan costs, probably for several years. That might be affordable for some small professional firms, but low-margin businesses just don’t have that capacity.
But let’s put this in perspective. Fewer than 10,000 private plan members have a drug cost in excess of $100,000. That’s not insignificant, but across the 27 million Canadians covered by private plans it is likely a manageable risk for the group insurance industry.”
You say DRDs should be a manageable risk. What needs to happen to make it so?
“This is an industry-wide issue that requires collaborative work that will take years. The DRD problem needs active, ongoing management. The longer it takes to get that started, the bigger the problem becomes.
But this goes beyond the private drug plan market. The way forward requires insurers to engage with provincial governments and advocate for more federal funding. A system-wide, coordinated plan is needed to evaluate and fund DRDs, sustain affordable coverage, and make sure patients get what they need.”
What about Canada’s new National Strategy for Drugs for Rare Diseases?
“The strategy excluded private drug plans. It’s pretty simple at this point, consisting of bilateral agreements with each province and territory that revolve around a common list of 15 DRDs. Québec has a separate, limited deal. In exchange for federal funding, all other provinces have agreed to provide annual accounting and to report on outcomes. Right now [October 2026], only Ontario and British Columbia cover all 15 DRDs. The number one DRD covered by private plans, Trikafta, is not even on the list.
Given limited and uncertain federal funding, and that carve-out for private plans, insurers and leading benefit advisors need to strongly advocate for a second iteration of the national strategy that embraces the two-thirds of Canadians with private plan coverage.”
The two main mechanisms to manage high-cost drug claims are claim pooling by individual insurers and risk sharing between insurers. How do they need to evolve?
“Insurers have done claim pooling on their own for decades, but now there are so many high-cost claims and claimants that you get a lot of bounce. An industry-level drug claim pooling facility with consistent adjudication standards would take out some of the volatility and make the risk more predictable and therefore more affordable for plan sponsors. This is not a competitive thing so much as it is a core sustainability issue for private drug plans.
On the risk sharing front, the Canadian Drug Insurance Pooling Corporation includes all health insurers and has operated since 2013. Despite market developments, it has not changed significantly since then. It does not directly help plan sponsors, and is limited to recurrent claims in fully pooled plans. Québec has a much better, mandated model that covers all but its largest employers. Assuming private plans continue to be excluded from the national strategy, access to DRDs in private plans will force insurers to develop one, national system, likely based on Québec’s regulated model. This evolution is long overdue.”
Where do we go from here?
“People I talk to are well aware of the problem and it’s obvious it can’t be resolved by any one organization or stakeholder. The good news is there are solutions and they come down to the industry-wide drug claim pooling facility and national risk sharing model that I described earlier. Insurers can handle both of these through their industry association.
The other piece is a much more organized advocacy strategy that insurers and benefits advisors can take to governments. The new Smart Health Benefits Association could be a really important part of the solution, working with insurers to improve and expand the next funding cycle of the national DRD strategy to include all 27 million Canadians with private plans. That won’t be easy, but it is in the interest of patients and insurers to have a much bigger voice in covering these ultra-high-cost drugs. As I said, the problem only gets bigger the longer we stay disengaged.”
