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.
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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.”