Subscribe to our Newsletter Subscribe to our Magazine
drugs-benefits

For years Cheryl Lundrigan has taken a prescription drug to treat chronic depression. Although she had started out taking Zoloft when first diagnosed, once the drug became available in the less expensive generic format, she switched to Sertraline. But recently she suffered a relapse and the medication didn’t seem to help any more. Rather than switch to another anti-depressant, Lundrigan’s physician suggested that she go back to the original brand version of the drug to see if it would have a more positive effect than the generic.

Since Lundrigan’s drug plan is “mandatory generic,” the physician gave her a card from the drug manufacturer to offset the higher cost. By presenting the card to her pharmacy when filling her script for the brand, Lundrigan’s employer-sponsored drug plan paid the generic cost and the drug manufacturer picked up the rest.

Such a scenario is what is supposed to happen with pharmaceutical manufacturer-issued patient reimbursement cards, also known as patient choice or coupon cards. But private insurance prescription drug coverage varies significantly across the board, and depending on the insurer’s plan design, eligibility and costs to plan members, the cost to plan sponsors will also vary.
This latest evolution in patient reimbursement support programs has gained popularity over the last couple of years as a way to promote brand name drugs to physicians, pharmacists and patients while supplementing the cost difference of a higher-priced drug. The basic idea is that patients can access the drug that works best for them or the one they prefer without having to pay out-of-pocket if their drug plan doesn’t cover the full cost.

“Our members that manufacture drugs want patients to have a choice to stay on the drug that is working for them or to have access to a medication that wouldn’t otherwise be accessible,” says Shannon MacDonald, vice-president, public affairs and partnerships, with Rx&D (Canada’s Research-Based Pharmaceutical Companies). “The cards are intended to be revenue-neutral to drug plans. The point is to ensure that there is the highest amount of choice for patients and that they do not face a financial burden. If the patient is happy to switch to the generic version, that is still his or her choice.”

Lundrigan’s experience using a reimbursement card is only one example of how payment for the drug could flow from one payer to another.

Here’s a look at the different scenarios that could arise, depending on how the drug plan is designed.

* Generic drug prices used here are based on Ontario rules which set generic prices at 25% of the brand drug, however percentages may vary across the country.

1.  Mandatory generic: The brand drug costs $100. Based on the current ratio between brand and generic prices in many provinces, the generic drug costs 25% or, in this case, $25. So when using a card to get the brand, the drug plan pays $25 and the manufacturers pays the remaining $75. Without a coupon card, the patient would have to pay the $75 if he or she wanted the brand name drug. This scenario is cost-neutral to the drug plan.

2.  Voluntary generic This is where patient reimbursement cards could potentially be more expensive for drug plans. The brand drug costs $100. Typically, when the patient presents a prescription, the pharmacist substitutes the lowest-cost alternative, most likely a generic. But if the physician has written “no substitution” on the script accompanying the card, the pharmacist overrides the generic substitution and provides the brand drug. In this case, the drug plan is on the hook for the full $100, minus any co-pays or deductibles that the plan member pays.

3.  Co-ordination of benefits
Scenario A: When a patient covered by a mandatory generic drug plan presents the script and the reimbursement card for a brand drug worth $100, the first payer covers $25 of the cost. If there is a secondary payer such as a spousal plan, the remaining $75 is then charged to that plan. If the spousal plan is also mandatory generic, then it will pay for another $25 and the remaining $50 goes to the manufacturer.

Scenario B: If the secondary payer’s plan is voluntary generic or open, this plan will cover the remaining $75. In both scenarios, the drug plans acting as secondary payers could face unexpected costs as more patients opt for brand drugs instead of less expensive generics.

The patient’s perspective
With “mandatory generic only” drug plan coverage, Lundrigan was relieved to have a patient reimbursement card that paid the cost difference between the brand drug and its generic equivalent. “I couldn’t afford to pay the out-of-pocket cost,” she says. “And I do feel a bit better now that I’m taking the original [therapy].”

She’s not alone in her appreciation. With up to three-dozen drugs associated with drug cards––especially popular blockbusters such as Lipitor––a growing number of patients are taking advantage of the opportunity to stay on or go back to the brand name.

“People should have the right to choose if they want to take the brand version of the drug,” says Steve Nicolle, CEO of STI, a company that pioneered reimbursement card solutions in Canada. “And physicians often balk at the idea of changing from a brand drug that is working to a generic drug, especially in certain therapeutic areas.”

Dr. Catherine Birt, a Toronto-based ophthalmologist, agrees. “I am not as convinced as I need to be that generic alternatives are interchangeable with the brand drugs,” she says. “Even if the active ingredient is the same, there might be other additives that are different, or the eyedrop bottle may be more rigid and not as easy to squeeze.” At the same time, she is well aware of the cost burden that higher-priced brand drugs may present to patients. “If the drug plan won’t cover the brand drug and the patient can’t afford to pay the difference, then I will make the switch to generic. But it means monitoring the patient more closely for side effects.”

Add a comment

Have your say on this topic! Comments that are thought to be disrespectful or offensive may be removed by our Benefits Canada admins. Thanks!

* These fields are required.
Field required
Field required
Field required