Search

Why does my health plan only cover the cost of generic drugs?

Featured image of the SBIS tree logo set on a solid green background
Canada's Medicare program excludes a number of health and dental services — it covers only services by primary physicians and in-hospital care deemed medically necessary. So you can expect to pay out of pocket for prescription drugs. Having a health insurance drug plan can be invaluable for protecting you from these expenses. Often, these drug plans only cover the cost of generic drugs. Here is a quick overview of what a drug plan does (and does not) cover, and why that is important to you.

Prescription Drugs Are Covered

Health insurance plans cover many prescription drugs. To be eligible for coverage, a prescription drug must

  • be prescribed by a physician, dentist or psychiatrist
  • be medically necessary
  • be approved for sale in Canada
  • have an associated DIN (Drug Identification Number).

A Drug Identification Number (known as a DIN) is an eight-digit identification number assigned by Health Canada to all prescription drugs sold in Canada. A DIN provides information such as the drug manufacturer, the name of the drug, and the active ingredients in the drug. The DIN is always displayed somewhere within the drug container’s label and is listed on the receipt from the pharmacist.

Not all prescription drugs that meet the above requirements are covered by all health insurance plans. “Lifestyle” drugs, such as smoking cessation aids, fertility, weight loss, and sometimes brand name drugs, are typically not covered. Only some drug plans provide coverage for oral contraceptive drugs.

Examples of common prescription drugs that are covered by health insurance plans are

  • high blood pressure (hypertension) medications
  • drugs used to control high cholesterol levels
  • insulin for diabetics.

Individuals requiring these drugs often need them for long durations — making health insurance prescription drug coverage very valuable in protecting against out-of-pocket costs.

Drugs That Are Never Covered

The following drugs are never covered by personal (individual) health insurance:

  • drugs that are not prescribed (e.g., over-the-counter drugs)
  • drugs administered in a hospital (these are covered by your provincial healthcare plan)
  • drugs that are experimental and not yet approved for sale in Canada
  • drugs that do not have a DIN, even if they are prescribed (for example, drugs that are mixed together such as creams).

Drugs That May Be Covered

Depending on your health insurance plan, these drugs may be covered:

  • new drugs that have just been approved for public use (e.g., drugs just out of clinical trials)
  • “Lifestyle” drugs such as smoking cessation aids, contraceptive and fertility drugs
  • brand name drugs if there is no equivalent generic drug.

What are generic drugs?

“Generic” is the term used to describe a drug product that contains the same active medicinal ingredients (the stuff that actually makes you better) as the corresponding brand name drug. Generic drugs are safe, effective, and of equal quality to the brand name version. However, substances used to combine or bind the medicinal ingredients may be different.

Generic drugs must be approved by Health Canada, who ensures generics meet certain clinical standards so that they may be substituted by the pharmacist when a brand name drug is prescribed.

medicine-healthcare-and-all-things-related-prescription-form-with-stethoscope-over-it

Many generic drugs are now available because their brand originals have expired patents. In fact, in 2017, generic drugs accounted for 70% of retail prescriptions, but only around 20% of Canada’s spending on prescription drugs, according to the Canadian Generic Pharmaceutical Association¹.

¹ Source:  http://canadiangenerics.ca/wp-content/uploads/NationalMarketShare_Usage2018_ENG-1.pdf

Why do health insurance plans usually have generic substitution?

Many health insurance plans will not cover the costs of a proprietary, brand name prescription drug if there is an equivalent generic drug available. There are two reasons for this:

  • Generic drugs are substantially cheaper compared to equivalent brand name prescription drugs.
    Depending on where you live, the savings between brand name and generic drugs are significant — they cost 33%, 75%, or even 90% less!
  • Brand name drugs sold in Canada are not always manufactured in Canada.
    Generic drugs sold in Canada, by contrast, are mostly made in Canada. This makes them considerably better for the Canadian economy, a major advantage at every level.

By requiring generic substitution, insurers are working to help curtail rising premium costs. That’s good news for you! And you play a role in ensuring your insurance is affordable and fits your budget by using generic drugs. By buying generic drugs, you can save your own hard-earned dollars and help reduce costs to your plan.

What if you still want a specific brand name drug?

Remember, a brand name drug will be covered if no generic equivalent exists.

If you want a specific brand name drug, your ‘mandatory generic’ health insurance plan will pay the generic equivalent. For example, suppose a brand name prescription drug costs $100, and the generic drug costs $25. Your drug plan will cover $25, and you will be responsible for $75 (the remaining amount due).

You can inform your physician that your health insurance plan does not cover brand name drugs. In some situations, he or she can provide you with a card from the drug manufacturer to offset the higher price. You can present the “patient choice” or “coupon” card to the pharmacy when having your script filled, and you may not face any out-of-pocket charges.  Your physician can also submit a special authorization form to the insurance company for special permission to cover the drug if in their opinion it is the only drug that will work for you.

Considering which health plan to choose?

If you are considering a health insurance drug plan and want to know exactly what is and is not covered, talk to us today.  At SBIS we can help you be confident knowing what is and is not covered by the plan!

Comments

Your email address will not be published. Required fields are marked *

Related posts