Generic Drugs – Are they really the same?

May 20, 2014

In today’s economically challenged health care system, it has become increasingly important for all stakeholders such as plan members, plan sponsors, insurance companies and governments to find ways to generate effective health care solutions while containing costs.

To that end, we hear a lot about generic drugs and their usage. But are they really the same as the brand name drugs? Can there be adverse reactions, and is there really much of a cost savings?

Generic drugs must contain the identical active ingredients as the brand name product. However non-medicinal ingredients, like fillers and ingredients that give the drug its colour, may be different from those of the brand name product. It is very rare, but some people do have adverse reactions to the fillers in the generic drugs which may require them to take the brand name option.

Provincial government negotiated price controls have had a dramatic impact on the cost of generic drugs over the last few years. As a result, the most frequently dispensed generic drugs now cost a maximum of 18% of their brand name counterpart, which is why many employer drug plans have changed their coverage to “mandatory generic”. This means the reimbursement will be limited to the price of the least expensive generic equivalent available on the market.

Generic drug use continues to grow in Canada as evidenced by the fact that 58% of all drugs paid for by employer plans were for generic drugs. There still remains a number of drugs under patent protection, also known as single source drugs, that represents remaining prescriptions dispensed in Canada. As drugs come off patent, there are often a number of generics ready to enter the market which helps drive the price downward.

Generic drugs are not only safe and effective; they can also result in significant savings for all stakeholders.

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