The next step in
generic drug substitution
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The recent trend of relatively low increases in drug costs may be changing. As patents on high-profile brand drugs expired
– also known as the ‘blockbuster patent cliff’ – and lower-priced generic equivalents became available, drug plans saw
some cost relief. But with a new crop of expensive biologic and other single-source drugs being developed, average drug
prices will likely rise again. Additionally, government-driven pricing controls are not expected to continue. And as patients
have access to more information about drugs, they are more likely to ask their doctors and pharmacists for brand names
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that they have seen advertised.
Sun Life’s mandatory generic substitution program is an effort to mitigate future drug plan cost increases for you and
your employees.
Generic substitution
Generic drug substitution is a widespread cost-saving measure on drug plans. It means that, when a doctor prescribes a drug,
the pharmacist dispenses the lowest-priced equivalent (usually the generic) version of that drug, if one is available. Generic
drugs use the same active ingredients as brand-name products, but usually cost significantly less. However, if a physician
writes “no substitution” on a prescription, the higher-cost brand drug may still be dispensed.
Mandatory generic substitution
Mandatory generic substitution ensures that all claims for drugs with a generic version are cut back to the lowest-priced
equivalent, even if “no substitution” is indicated on the prescription. Employees will be required to pay the difference, if
the higher priced alternative is dispensed. Generic drugs generally provide the same quality, purity and effectiveness of
treatment, but at a lower price, and are therefore a great option to manage spending on drugs.
Benefits
What’s in it for employers like you:
• M
ore control over your drug plan, and a lower drug spend. In turn, your employees will be more aware of their drug choices
and costs covered by their drug plan. Sun Life’s sustainable drug plan design could mean a more secure future for employer
group drug plans like yours.
What’s in it for employees:
BrightChoices™
• E mployees will maintain control over their drug choices. They’ll get continued access to comprehensive reimbursement for
the medications they need. Employees may also have an increased understanding and appreciation of the value of their plan.
For more details, please see the helpful Q&A section on the next page
BrightChoices™
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Q&A
BRAND VS. GENERIC DRUGS
Q:Are generic drugs as effective as brand name medications? Why are they less expensive?
A:Generic drugs use the same active ingredients as brand-name products, but usually cost significantly less. They are
clinically identical to the counterpart brand name drug, with the same active ingredients. There is generally no difference
in the quality, purity, effectiveness or safety between generic and brand name drugs. So the patient’s level of treatment
is fully maintained when using a generic equivalent.
Generic drugs are produced when the patent on a brand drug expires. Generic drug manufacturers are able to
produce a virtually identical medication without making the investment in research and development, making the
drugs less expensive.
Q:How does mandatory generic substitution save money for our drug plan?
A: Here’s an example with a brand name drug and its generic equivalent:
A generic equivalent for Zocor, a drug used to lower high blood cholesterol, was introduced in 2010. Zocor has been
widely prescribed, but the generic equivalent is currently about one-third of the cost. The generic drug generally offers
the same drug effectiveness but at a significantly lower cost.
Mandatory generic substitution implemented
Cost of lowest-priced
equivalent (generic:
simvastatin)
Cost of one-month supply
$30.18
Plan pays 80%* of lowest-priced $24.14
equivalent
Employee pays the rest*
$6.04
Cost of brand
name (Zocor)
$90.57
$24.14
$66.43
*Example only, your plan may cover more or less than this amount.
From this example, you can see that your plan reimburses only for a portion of the cost of the generic equivalent, even
if the employee chooses to purchase the brand name. Generic drugs give your employees the best value and can quickly
result in substantial savings for your drug plan.
Q: What’s Sun Life doing to counter brand manufacturers’ “coupons” and reimbursements to members?
A:Several brand drug manufacturers have begun to promote “continuity of care” (or similarly named) programs.
(One example of these programs can be seen on the website rxhelp.ca.) These are mostly aimed at patients who are
already on brand drug medications, urging them to continue to purchase brand drugs and offering reimbursement up to
the full cost of the brand.
Mandatory generic substitution is a great counter to programs like these, as the drug plan will only ever reimburse up to
the cost of the lowest-priced equivalent (usually a generic). If the employee chooses to purchase the brand drug, it is up
to them to initiate a claim with the brand drug manufacturer, and neither Sun Life nor you (their employer) is responsible
for paying this additional cost.
EXCEPTIONS
Q: What if a member’s doctor does not recommend a generic substitution? Is there an Exceptions process?
A: There may be valid medical reasons for not substituting a brand name drug with a generic or lowest-priced equivalent.
Q&A
The member’s doctor will need to complete the Drug Exception Application form and provide the medical reasons
for the request. If the reasons are accepted by Sun Life, the plan will cover the cost of the brand name drug. Once
accepted, Sun Life may request that the member resubmit the exception request form in the future. A note on
exceptions: unless a plan member provides medical evidence from their doctor that a prescribed brand name
drug cannot be substituted, they will be reimbursed based on the lowest-priced equivalent drug that has the same
medicinal ingredients.
INTERACTION WITH OTHER PROVINCIAL DRUG PROGRAMS
Q: How does mandatory generic substitution interact with provincial integration?
A:For provincial integration, the employee is expected to apply to the provincial program first. Once accepted by the
program, it will pay first. Then, any remaining amount can be submitted by the employee for reimbursement to Sun Life
where mandatory generic substitution will apply. For more information, please see our previous communications on
provincial integration: 1) Focus Update “Enhancing integration with provincial drug programs”, December 9, 2010 and
2) Focus Update “Amendment to your Extended Health Care Benefit Contract”, July 28, 2011.
Q:For my employees in Quebec, how does mandatory generic substitution work with RAMQ?
A: Mandatory generic substitution applies in Quebec along with the other provinces, however the savings are reduced
because of the requirement to pay up to the RAMQ minimum of 68% when a brand name drug is still on the RAMQ
formulary. Here’s an example:
Mandatory generic
implemented
Cost of prescription
Plan pays 80%**
BRAND DRUG NOT BRAND DRUG NOT
LISTED ON RAMQ LISTED ON RAMQ
BRAND DRUG
LISTED ON RAMQ
No
Yes
Yes
$100
$80
$25
$20 (plan saves $60)
$100
$68 (plan still
saves $12)
(requirement to pay
up to RAMQ min. of
68%)
**Example only, your plan may cover more or less than this amount.
EMPLOYEE RESOURCES
Q:How will my employees know if they are taking a brand drug that will be cut back?
A: Many pharmacists automatically dispense the lowest-priced equivalent drug, and many employees may already be getting
a generic. If an employee is unsure as to whether they are taking a brand drug they can speak with their pharmacist.
Additionally, provinces that have mandatory interchange laws include Saskatchewan, Manitoba, Newfoundland and
Labrador, and Prince Edward Island. These provinces require that the interchangeable product dispensed be the lowestpriced product available.
In the remaining provinces: Nova Scotia, New Brunswick, Quebec, Ontario, Alberta, and B.C., legislation permits
interchange, but it is not mandatory. Pharmacists may substitute a prescribed drug with an interchangeable drug.
Q&A
The table below provides a summary:
Province
Mandatory
Interchangeability
Saskatchewan
Manitoba
PEI
Newfoundland and Labrador
British Columbia
Alberta
Ontario
Quebec
New Brunswick
Nova Scotia
Optional
Interchangeability
3
3
3
3
3
3
3
3
3
3
Q: What are the options for employees (other than Exceptions)?
A: Employees will have the option of submitting the difference through coordination of benefits (COB) or their health
spending account (HSA) to get additional reimbursement, if these options are available to them. They can also discuss
other lower-cost medications with their doctor.
Q:What information and education will Sun Life offer to help me introduce mandatory generic substitution to
my employees?
A: We realize that employees may not be familiar with generic drug substitution, and may not understand the full value of
generic drugs. So we’ve prepared a template letter that you can distribute to your employees to announce this change
to their drug plan – simply fill in your company name and the effective date of change. We have also created a brochure
for your employees called “Choosing the lowest-priced drugs means value and savings for you and your drug plan”
that you should receive from your Sun Life group benefits representative and can distribute to employees. Finally, your
employees are welcome to visit mysunlife.ca and look up their drug coverage, or to call our Customer Care Centre at
1-800-361-6212 for more information.
BrightChoices™
If you have more questions, or would like information on all of Sun Life’s
innovative drug cost management solutions, please visit sunlife.ca/brightchoices
or contact your Sun Life Financial group benefits representative.
BrightChoices™
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Group Benefits are offered by Sun Life Assurance Company of Canada,
I Nthe
N OSun
V A TLife
I V EFinancial
S T A N D group
A R D S of companies.
a member of
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