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The notion that generic drugs represent a new and frightening concept has pretty much been struck from our collective consciousness, yet generic utilization rates in drug plans in Canada have not reached the levels observed in the United States and throughout much of Europe.
Perhaps this is because plan sponsors don't want to challenge the status quo or patients are simply resigned to the fact that the doctor knows best. Often, there is concern from patients that the generic drug is not as good as the brand version. But, since the active ingredient is identical, and it's only the filler agents that are different, this archaic belief couldn't be further from the truth.
Several insurance companies and pharmacy benefit managers recognize the need to further promote the use of generic drugs to help plan sponsors control the costs of managing their drug plans while balancing the health needs of their members and have taken steps to offer mandatory generic substitution in drug plans.
A mandatory generic substitution plan simply eliminates the member's ability to be reimbursed for the full cost of a brand name drug, forcing the fill of a generic drug where one is available. That doesn't sound like a new development, but at three recent drug conferences, plan sponsors acknowledged the fact that their plans would accept a doctor's prescription with a "no substitution" message written somewhere on the form. Accepting such a ticket is evidence that generic drugs are not treated by these sponsors as the default option but promoted as some sort of desired outcome.Making the adoption of generic drugs mandatory can save drug plans substantial sums over a three- to five-year contract. Insurance companies often report savings of between 1% and 2% of total drug spend-although when you factor in price differences brand and generics, I believe the actual amount to be much greater, but hard numbers are difficult to substantiate.
It was apparent at these conferences that, in addition to a general misunderstanding of the differences between optional and mandatory generic plans, many sponsors miss a huge and costly area of potential risk.
The message sponsors need to understand and share with their members is that mandatory generic drug substitution in benefits plans will help curtail rising costs-which impact both plan sponsors and plan members. Both groups need to get a handle on this and members need to understand the role they play in controlling costs and the reason that mandatory generic substitution has been adopted in the first place.
Protecting against COB
A sponsor that offers an optional generic drug plan opens its wallets to claims processed by a member's spouse for the balance of the costs not reimbursed by the spouse's plan. The spouse's plan might cover brand name alternatives that are offered at significantly higher costs. A mandatory generic plan will treat the COB claim as if the sponsor's plan were first payer and limit the spouse's COB portion only to the differences in drug markup, co-pay and deductible portions of the filled prescription. Yes, the member and his or her spouse will be out of pocket for having chosen the brand, but the plan will be saved the extra cost.
More generic drugs will be made available over the next two to three years as their brand originals face expiring patents. Depending on the plan's jurisdiction, the savings between brand and generic have already been documented as being significant. Sponsors will come to recognize the facility offered by mandatory generic plans as is the most reasonable and easiest to option to help contain their drug plan costs.
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