Brand Name Drugs vs Generic - Part II

What generic drugs mean to business (not just a benefits plan)

The recent National Post article on generic drugs is a topical reminder on the issue of generics, brand names and cost management.   

Generic vs Brand Name drugs

Who says generics and brand name drugs are the same?

Luckily, there’s an independent body that validates whether a generic and a brand name drug are the same - Health Canada. See Health Canada regulates the effectiveness of generic medications. Their regulations are complex and rigorous but ultimately, tests are in place to ensure the generic version of a drug works the same as the brand name for the vast majority of people. 

The National Post highlights the question of whether that regulation results in generics being “the same” or not. After all, we’re all different; we have different DNA and lead different lifestyles.  Generics can’t always work the same for everyone - that’s the point the National Post writer made.  Turns out Health Canada agrees, for the most part. 

The process is complicated but to simplify what Health Canada looks for, let’s say a brand name drug contains 40mg of a chemical ingredient and is designed to be released into the body over a period of 8 hours.

When evaluating the generic drug, firstly, it too must have 40mg of the identical chemical ingredient.  Secondly, it has to be released into the body over 8 hours, and at any point in time, must have roughly the same concentration in your body as the brand name.  

If these criteria are met, you can be confident that the generic drug will have the same health effects as the brand for 98%+ of the population. Those are pretty good odds.

The takeaway here is that the concentration levels in the body result in effectiveness being the same for the vast majority. That’s a lot different than mistakenly believing generics are allowed to be 20 % less effective.

What does this mean for plan sponsors?

When it comes to generic and brand name drugs, Health Canada ensures they’re equivalent. But, generic drugs cost as little as little as 25% of their brand name counterparts. In fact, as of April 1, the maximum price of a generic will be limited to 18% or the brand name’s price. Providing coverage for generic drugs first as a matter of policy makes good sense for both plan sponsors and members. Not surprisingly, that’s why every provincial government program in Canada provides coverage for generic drugs before the brand name.

What happens in those situations where the brand name may be better?

Simple solution – the plan should cover the brand fully when it’s medically necessary. This acknowledges that occasionally, for some people, the brand name might be more effective. It’s important for plan members to know that their plan has got them covered. 

Being informed always leads to better decisions. Always. It’s important to understand the implications the generic drug issue has on your clients’ businesses.