To Generic or not to Generic? That is the question.

Dec 10, 2012

The marketplace continues to have considerable discussion on the role generics play in managing drug trends and plan sustainability. The focus is shifting from legislation driving change to insurers’ cost management strategies.

In the past two years, provinces passed legislation to limit the price charged for generics from 65% of brand price point to a range from 20% to 35% of brand cost. This represents a 45% to 70% potential reduction. The hoped for savings have not materialized as many private plans may not be equipped or set up to take advantage of generic pricing or legislation.

Many insurers are now “suggesting” a mandatory generic substitution design to plan sponsors. What is unique about the insurer approach is that some are proceeding with automatic changes to plan designs and thus driving the conversation in an attempt to increase sponsor uptake on drug management.

This blog cannot summarize all  the moving parts required  to compare a generic drug to a brand name drug. It appears the more information one seeks to enhance understanding, the more complex the conversation becomes.

What is remarkable is the relatively small percentage of plans that have made a shift to some form of drug management. This is likely to change in the future as sponsors continue to explore innovative ways to enhance their plan member value proposition.

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