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Major Insurance Carriers Jump on the Generic Substitution Bandwagon

Market leading insurance companies such as Sun Life Financial and the Co-operators Life Insurance Co are transitioning to generic substitution in an effort to ensure long-term drug plan sustainability. As of recently, all new business to their pay direct and pay deferred drug plans will be set up with mandatory generic substitution.

What this means for new clients

  • When a doctor writes “no substitution” on the prescription, the patient is reimbursed only for the lowest price equivalent (where existing clients would be covered for the higher priced brand name drug). An exception to this rule occurs when the customer can provide medical evidence that there is no appropriate substitute.

What this means for existing clients

  • No changes have been made to benefit plans unless otherwise requested by the client.

Will generics drive brand name drugs out of the business for good?

Currently, the average claim for a brand-name drug is $72, whereas generics are only $27 on average. Generics are growing in popularity, and only time will tell what companies will do next when it comes to generic substitution.