Prescription drugs - Selecting the coverage that's right for you.
It’s no secret that prescription drug costs are on the rise. According to the Canadian Institute for Health Information, total drug expenditure is estimated to have reached $33 billion in 2012. With significant advancements in the treatments of rheumatoid arthritis, cancer, multiple sclerosis, just to name a few, it’s not uncommon to see annual drug costs for these patients totaling $10,000- $100,000, or more. To illustrate this point, in 2013 insurers in Canada paid more than 4,000 claims for prescription drugs that cost in excess of $25,000.
In response to these advancements, private insurers and plan sponsors have had to make changes to their plans in order to control claims costs and keep coverage affordable.
It’s important for all plan sponsors and plan members to know what they’re covered for in order to avoid surprises at claim time. So here’s a quick summary of the 4 most common drug plan options being used in the market today:
Brand Name – no coverage restrictions. All drugs are typically covered under this type of a drug plan.
Generic (no substitutes) – covers the cost of generic versions of drugs. When it comes to brand name drugs, these could be covered, if your doctor writes “no substitutions” on the prescription. A doctor will typically do this for you if they feel the brand name version of the drug would be more effective.
Mandatory Generic – only the cost of generic drugs would be covered, regardless of whether or not your doctor specifies “no substitutions”. Brand name drugs are covered when no generic version is available. Many insurers are moving in this direction, some are now exclusively offering mandatory generic plans.
Formulary – many insurers offer options where drug coverage is tied to a formulary. A formulary is a pre-set list of drugs that are covered under the plan. For example, the Chambers of Commerce Group Insurance Plan utilizes the National Formulary, a listing that includes approximately 86% of the most commonly prescribed drugs. Formularies are regularly reviewed and updated so as to remain consistent with current medical trends.