An Ontario arbitrator has struck down an employer’s imposition of mandatory generic substitution in its benefits plan.

Last week, arbitrator Russell Goodfellow ruled on a grievance by United Steelworkers Local 1-2010 that challenged Eacom Timber Corp.’s move to mandatory generic substitution in 2016. As part of the change, the plan would reimburse employees only up to the amount of a lowest-cost alternative where a generic drug was available. It would cover brand-name drugs if a generic equivalent wasn’t available or if employees had a doctor fill out a form noting they couldn’t tolerate the alternative or that it wouldn’t work for them.

The union, which represents workers at Eacom’s plan in Timmins, Ont., disagreed with the change, suggesting the company hadn’t negotiated a change to mandatory generic substitution in the collective agreement. The collective agreement provided that the company would cover prescription drugs subject to a 35-cent deductible and a number of conditions, including a restriction on reimbursing medications used for beauty or cosmetic purposes. The company argued that even with generic substitution, it had met its obligation in the agreement by providing an insurance plan. It noted it wasn’t denying employees prescription drug coverage and that reducing costs is to everyone’s benefit.

Read: Freedom of choice may be coming to an end in drug plans

Goodfellow, however, disagreed in a ruling that found the company couldn’t impose mandatory generic substitution. “A prescription drug is a drug prescribed by a physician,” he wrote.

“The prescribed drug might be a brand name drug or it might not. Where it is, assuming the employee does not wish to have the generic equivalent, the employee is entitled to be reimbursed the full cost of the drug prescribed, not the generic equivalent.”

The company, Goodfellow noted, was trying to cut costs by limiting the circumstances in which employees could access brand-name drugs. “In my view, that is contrary to the collective agreement,” he wrote. “It reduces or limits the agreed-upon benefit.”

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Denis Garand:

That is a very unfortunate decision. Generic equivalents are the same molecules as Brand name the only difference is the filler. It is possible some individuals react to the filler so what was proposed was sensible.

There has to be more education that moving to generics from Brand name does not take anything away. Buying Brand names is throwing money away.

Tuesday, September 26 at 11:55 am | Reply

Joe Nunes:

Denis, I am not sure the ruling is unfortunate. The union negotiated coverage for prescription drugs and the arbitrator just ruled on what was negotiated.

There may be good reasons for the employer and union to negotiate generic substitution and the collective bargaining process allows both sides the opportunity to explore the option.

Tuesday, September 26 at 1:33 pm | Reply


Yes, and a generic drug is a “prescription drug”, so I don’t see how the employer was in contravention of the CA. A greater concern is having an unsustainable benefit plan. That is the underlying issue and certainly ‘generic substitution’ should be an item high on the list for negotiation via the collective bargaining process. With education, this shouldn’t be a hard sell.

Tuesday, September 26 at 5:46 pm | Reply

Mike Duggan:

Dennis is right and Joe is right and the judge is right. The union bargained for one thing and the company changed it to another. That will be bargained at the next negotiations. And as I’ve learned personally, the “only difference is the filler” with Generics is not always accurate. Doctors prescribe by habit; pharmacists are the experts on the actual drugs, both name brand and generic.

Tuesday, October 03 at 11:10 am | Reply

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