The Law

By definition a restricted formulary excludes certain prescription drugs. Often such restrictions are based on a value system that suggests the employer need not provide so-called lifestyle drugs, and should instead only provide drugs that it or the insurer deem to be medically necessary. On this basis then, it could be argued that by choosing to provide reimbursement for a particular drug an employer is effectively endorsing or approving the use of the drug.

In selecting the drugs for which employees will be reimbursed, it could be argued that an employer has a duty of care to ensure that the drugs on the formulary are safe and that employees are aware of the risks associated with them. This liability would be based on the tort of negligence. If a court were to agree with this stance, the employer would be liable if an employee or his or her beneficiary were harmed through the use of the drug.

Employers can breathe a sigh of relief. While the above argument could be made, it is not that persuasive. John Laskin, a senior litigation partner at Torys in Toronto, does not believe that a plan sponsor would be found liable under these circumstances.

"The employer/employee relationship is not analogous to a doctor/patient relationship," says Laskin. "Benefits plans are not mandatory and the simple listing of a drug does not create liability. A drug plan--even one with a restricted formulary--does not constitute an endorsement or a treatment recommendation. Instead, the formulary simply acts as a list of drugs that are prescribed by physicians and that will be reimbursed by the employer."

The position of the employer is different from that of the manufacturer of the drug, stresses Laskin. "In producing the drug, the manufacturer has a standard of care placed upon it. As a result, the manufacturer has a responsibility to be aware of potential side effects and to advise physicians as well as regulatory authorities of adverse consequences that might be associated with the product. The employer has no similar responsibility."

Another issue to consider is that drugs are regulated in Canada. Health Canada approves the drug and plays a role in assessing potential harmful side effects and suggesting how warnings will be given. Finally, the patient can only receive the drug by prescription.

Both the patient's physician and the pharmacist play a role in assessing the possibility of adverse side effects and warning a patient about potential risks. For these reasons, Laskin does not believe that an employer would be held legally responsible for any harmful side effects associated with prescription drugs listed on a restricted drug formulary.

A more difficult issue may be the employer's responsibility in circumstances where a drug is known to have side effects. Even then, it is unlikely that an employer has a duty to warn employees. "Physicians have primary responsibility for determining the appropriateness of the use of a particular drug. An employer is not in a position to make those assessments and cannot be considered to owe a duty to warn about particular drugs," says Laskin.

Restricted formularies may well carry human-rights related risks. However, at this stage they do not appear to put employers at risk under the tort of negligence. BC