A private plan's perspective on generic utilization

Over the last decade, the private market has changed considerably in Canada, with employee health benefit plan costs rising significantly. France Gauthier, manager of drug plan management at Medavie Blue Cross, discussed the important role of generics in the private plan landscape and, specifically, in the long-term sustainability of plans. She shared a case study showing how implementing mandatory generic substitution can help drug plans save money. She also explored the concept of how healthcare consumerism must be leveraged and all stakeholders engaged for success.

To optimize potential savings, in May 2013 Medavie Blue Cross decided to apply mandatory generic substitution to its standard book of business, effective immediately. Prior to implementation, 80% of its group plans already had some form of generic substitution, and 14% of plans already had mandatory generic substitution.

Gauthier pointed out that the average cost per claim for the top 10 drugs in Canada has more than doubled over the last ten years, rising from $82.00 in 2004 to $184.00 in 2014. “We have seen an increase in payments for catastrophic conditions rather than chronic conditions, and this has increased drug plan costs,” she noted. “Biologics did not figure in the top 10 drugs ten years ago. We have also seen a large number of blockbuster drugs go generic in the last ten years. Due to the large number of patent losses, brand manufacturers have developed coupon cards to maintain their market share of blockbuster drugs post-patent. These coupon cards encourage unsubstantiated physician/patient requests for substitution.”

Prior to implementing its new generics policy, Medavie discovered a 20% increase in doctors’ “no substitution” prescriptions in a one-year time span. “We thought this was particularly concerning, especially as the research suggests that only 0.5% of the population experiences a true adverse reaction to a generic product,” she said. Medavie then developed an exception process for members with a medically valid reason to use the brand product, in which physicians are asked to submit an adverse drug reaction form so Medavie can validate that a generic drug has been tried first before approving reimbursement for the brand-name drug.

As of May 1, 2013, 95% of fully insured groups had switched to mandatory generic substitution, and as projected, Medavie was seeing cost savings up to 2.5% on drug-plan spending. More than half (52%) of Medavie’s book of business has adopted mandatory generic substitution. On average, generics account for 60% of the drug plan’s utilization; in some provinces, it’s even higher.

Medavie Blue Cross credits their successful implementation to a proactive communication strategy. They met with consultants and employers to provide balanced information on the appropriate use and effectiveness of generic drugs. They also communicated with pharmacies and, 90 days prior to implementation, sent letters to 3000 plan members whose doctors had written ‘no substitution’ on their brand prescriptions. “We explained what generics are, why they should choose them, how using generics can reduce out of pocket expenses and insurance premiums, and help keep drug plans sustainable,” said Gauthier.

“Our plan sponsors were pleased with the seamless transition, and there were no increases in calls to our call centre—it was a smooth implementation,” said Gauthier. Over a third of the members with no substitution prescriptions (37.6%) switched to a generic, while 9.8% stayed on the brand through co-ordination of benefits. Also, the incidence of doctors’ prescriptions with “no substitution” dropped to 1.48% from 2.37%. Based on its approvals, with the member exception process, the insurer is seeing a true adverse reaction rate of 0.002%.

“Everyone has a role to play in maintaining sustainable drug plans for the future, including physicians,” concluded Gauthier. “In light of this, we developed a drug cost comparison mobile application to encourage physicians to consider the cost of medications when all else is equal.”