Health Canada has approved two generic versions of glucagon-like peptide-1 receptor agonist medication Ozempic, a move that could ease cost pressures for employer-sponsored benefits plans.
The introduction of generics is a key lever for controlling drug costs in both private and public plans, says Philippe Laplante, a principal at Eckler Ltd. “As a rule of thumb, as soon as one or two generics hit the market, their prices will be 20 to 30 per cent lower than the brand-name drug. Once two or three generics are available, prices are cut by 50 per cent and, over the long term, discounts can reach 75 per cent or more.”
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For a drug used as widely as Ozempic, this could translate to savings of one to two per cent for a plan sponsor’s total drug costs, he adds.
However, these savings may be impacted if plan members try to stay on their current brand-name drug or switch to another brand-name option. “Plan sponsors could ask their insurers if they have a strategy to limit these impacts, such as negotiating prices on brand-name drugs or requiring prior authorization to remain on them, ensuring those members are doing so for legitimate medical reasons,” says Laplante.
The broader pricing cycle is built into how the pharmaceutical market functions, he notes. “Notwithstanding pharmacoeconomic considerations, the goal of the pharmaceutical industry is to find efficient cures. For that, significant research and development costs are incurred. Those must be recouped, often leading to high-cost drugs hitting the market.
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