September 5, 2017

Another Reason to Opt for a Mandatory Drug Benefit

Mandatory drug plans (sometimes called enhanced generic plans) are becoming the standard drug plan as they protect the plan from unnecessary costs associated with some brand name drugs.  A mandatory generic plan reimburses at the cost of the lowest cost equivalent drug (usually a generic) regardless of what was prescribed by the doctor.  In the event that there is no lower-cost equivalent or there are proven medical reasons for taking the brand name drug, the brand name will be paid. 

For most drugs, there is very little difference between the brand name drug and its generic equivalent besides some binding agents, packaging, and cost.  Generics can cost as little as 18% of the brand name counterpart. 

Often doctors will prescribe the brand name drug because it is top of mind, not because they feel it’s a better drug.  With such a prescription, a pharmacist may substitute the brand name drug with the generic one thereby reducing costs to patients and private plans. 

However a recent Toronto Star investigation revealed that in some cases, an electronic prescription tool used by many doctors’ offices is forcing the brand name drug often without the doctor’s knowledge or intent.  Telus Health, adjudicates drug card claims for many insurance companies and also provides doctors with electronic prescription tools.  In a software upgrade, Telus has included a function so that when a doctor prescribes a drug by its brand name, it essentially changes the prescription to a “no substitution” prescription and includes a voucher from the manufacturer.  The pharmacist is therefore required to dispense the higher cost brand name drug.  If the plan is a mandatory generic plan, the plan pays up to the lowest cost generic and the balance is paid by the drug manufacturer by way of the voucher.  However, if the plan is a brand name or voluntary generic plan, the higher cost brand name drug is paid by the plan.  Neither the doctor nor the patient made the decision for the brand name drug – the electronic prescription tool operated by Telus did. 

Telus is paid a fixed fee by the drug manufactures to include their vouchers in this tool.  Vouchers have previously been made available by doctors or through various websites but this software tool streamlines the process for patients.  Yet, at the same time, it costs private plans and patients more. Patients pay more if their plan offers reimbursement less than 100%.

The software does allow doctors to opt out of this feature but not all have done so.  If keeping plan costs under control is top of mind, plan design controls such as mandatory drug plans are becoming more necessary.

Source:  Mclean, J., Bruser, D. (2017, July 29). Doctors use this software during patient visits. Now Big Pharma is tapping it to sell their drugs. The Toronto Star Retrieved from thestar.com

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