What is mandatory generic substitution?
Your health benefits plan is designed to provide you and your family with financial protection for a variety of medical expenses, including prescription drugs. Your prescription drug plan may have a cost saving feature known as mandatory generic substitution.
This plan feature helps manage the costs associated with prescription drugs. If you share in either the cost of your plan or the cost of your prescription, switching to generics may help you save some money!
How does mandatory generic substitution work?
Mandatory generic substitution helps manage plan costs by reimbursing the cost of your prescription drug up to the price of the lowest-priced alternative medication, which is typically a “generic” drug. If the drug you are prescribed is a “brand-name drug,” and there is no alternative or interchangeable drug, your plan will continue to reimburse your prescription based on the level of the brand-name drug.
Here’s an example of how mandatory generic substitution can work, assuming an 80% coinsurance is applied to the plan:
What are generic drugs?
“Generic” refers to a drug product that is equivalent to a brand-name drug. Pharmaceutical manufacturers are allowed to produce and sell generic drugs after the patent on the brand-name drug has expired. Even then, Health Canada must approve the generic drug before it can go to market.
Manufacturers must prove their product equals the brand-name drug. The active ingredients must be as pure. It has to dissolve in the same manner and it must be absorbed at the same rate as the brand-name drug. According to Health Canada, generic drugs have the same active ingredients and are identical to brand-name drugs in dose, strength and how they are taken. They are equally safe and effective.
The only difference in make-up is the inactive ingredients; the binders, fillers and dyes used to give the drugs their shape and colour. These differences have no effect on the drug’s active ingredients or how it works. Despite what you may think about some other generic products, generic drugs are not lower quality than brand-name drugs. Of course, one of the best things about generic drugs is the price – which is usually substantially lower than the brand-name drug.1
When filling a prescription – speak up!
In many provinces, pharmacists will automatically dispense the generic alternative as part of their standard practice unless the prescribing doctor has indicated that “no substitutions” should be made.
If your physician has indicated “no substitution” you can ask your pharmacist to dispense the lowest cost alternative – or you can accept the brand-name drug, and pay the difference between the brand-name price and the lowest cost alternative.
What if you can’t take the lower cost drug?
In rare instances, an individual cannot tolerate the generic drug, or it is therapeutically ineffective. When this happens, medical evidence can be submitted to support why the brand-drug is being prescribed.
If approved, your prescription will be reimbursed based on the cost of the brand-name drug. A “Request for Approval of Brand-Name Drug” form is available at otip.com/forms and must be completed and signed by a physician. We also recommend that if you have an adverse reaction to a drug, that this be reported to Health Canada at www.hc-sc.gc.ca
If you have any questions regarding your drug plan, please contact OTIP Benefits Services at 1-866-783- 6847.
(Prescription drugs – why pay more than you have to? Manulife GC2629E, 06/15)
1 Health Canada, “THE SAFETY AND EFFECTIVENESS OF GENERIC DRUGS”, www.hc-sc.gc.ca/index-eng.php