Negotiating Drug Benefits: Generics vs. brand names, pharmacy management, formulary limits, and prior authorization

In the wake of rising drug and benefit plan costs, workplace parties seek to negotiate drug benefit provisions which are cost-effective but still preserve the principles of group insurance. It is crucial for those involved in labour relations to be familiar with different strategies for controlling drug costs, including requirements for generic or therapeutic drug substitution, prior authorization, pharmacy management, and formulary limits. In this session, experts will discuss some of the creative new approaches Canadian workplace parties have adopted in an effort to provide quality drug benefits in a cost-effective manner. A medical expert will supplement this discussion by addressing related medical questions. Panelists will comment on issues including:

• Generic and therapeutic drug substitution: What is generic drug substitution? What is therapeutic drug substitution? What are the benefits and drawbacks associated with introducing such requirements into employee benefit plan coverage? What collective agreement language have parties negotiated regarding generic or therapeutic drug substitution requirements?
• Prior authorization: Should workplace parties negotiate language requiring prior authorization or pre-approval for coverage of certain medications? In such cases, who determines the “medical necessity” of a drug – the physician or the insurance provider?
• Pharmacy management: What strategies can workplace parties implement to reduce pharmaceutical costs associated with drug benefits? Capped dispensing fees? Maximum mark-up limits? Preferred pharmacy networks? Limited dispensing frequency for maintenance drugs? Do such restrictions detract from the provision of quality benefits for employees?
• Formulary limits: What is a drug formulary? Who develops formularies? What collective agreement language have Canadian workplace parties negotiated regarding formulary limits for healthcare benefits? To what extent do formulary limits help to contain drug plan costs? What are the risks associated with drug formularies?
• Effective communication: What information about drug and benefit plan costs are workplace parties legally entitled to receive during collective bargaining? What strategies can be adopted to facilitate better communication between employers, unions, and insurance providers regarding employee drug benefit coverage? What are some best practices for unions and employers to explain benefit plan coverage and negotiated cost-containment measures to employees?