Some people believe that brand name medications are superior to generic drugs. This view is perpetuated by the fact that brand name drugs cost more (sometimes we think that if something is more expensive then it must be of better quality) and physicians continue to prescribe brand name drugs and/or give out brand name loyalty cards so that patients can continue taking the brand name product.
My aim is to present the facts so that patients can make informed decisions when choosing between brand name and generic medications.
Here’s a little bit of a lesson on brand name and generic drugs:
Bioequivalence
If two drugs (ie. brand name and generic) are “bioequivalent” it means that there is a high degree of similarity in the rate and extent to which the active ingredient is absorbed into blood circulation and delivered to the site of action. All generic drugs in Canada are approved by Health Canada and have been shown to be bioequivalent to the Canadian Reference Product. To be approved by Health Canada, it must be proven that the drug contains the SAME amount of active ingredient, behaves the SAME way in the body and is manufactured according to the SAME strict quality standards.
The standards for bioequivalence in Canada are among the highest in the world.
Why are brand name drugs more expensive than generics?
Inventing a new drug involves a lot of research and testing. When a company comes up with a new medication, it has to recoup its research expenses. That is why they are protected by patents and charge higher prices. However, once their patent expires, generic drug manufacturers can produce generic drugs using the research done by the original company. They don’t have to do any of the background work/research and testing and can therefore offer the same drug at a lower cost (60-80% lower on average).
What are the actual savings made by public and private third-party payors when generic drugs are used instead of brand name?
In 2016, it was reported that 70.2% of prescriptions dispensed in Canada were generics but it only represented 22.4% of the total cost of prescriptions. For every 1% increase in generic drug use in Canada, Canadians save an additional $480 million.
Why do pharmaceutical companies provide brand name cards similar to third-party drug plans?
When the patent for their drug expires, they don’t want to lose business to generic drug manufacturers. In an effort to keep patients on the brand name product, they may offer a card to cover the difference in cost. This is marketed as a charitable way of allowing patients to continue receiving the original brand but in reality, studies suggest that the brand name manufacturer pays the full cost difference between the brand name and generic drug LESS than 5% of the time.
Reasons:
If a patient has private drug insurance, it must be charged FIRST and the drug loyalty card second or as a last payer as per the fine print on the drug loyalty card. If the patient’s benefit happens to pay for most or all of the cost regardless of whether the drug is brand name or generic, the private drug insurance ends up paying for the majority of the cost. You might think that this doesn’t affect you if you’re paying zero but there are possible consequences. Insurance premiums could increase, meaning your employer might end up paying more for health benefits. In turn, you might receive less benefits in the future or other areas like vision or specialty services like physio might see reduction in coverage.
Brand name companies raise the price of drugs on an annual basis. On the other hand, generic prices (in Canada) can only go down. Over time, the price difference between a brand name and a generic drug might be a lot more than when a drug loyalty was first given. For example, the price difference might be $50 this year and next year it’s $55. With some drug loyalty cards, they may only cover the original price difference which is $50. The patient will have to pay for the extra $5. Or I’ve also seen in some cases where pharmacies end up waiving the extra cost year after year in an effort to please patients. When they start doing that, it’ll be extra difficult to explain to patients when they reach a point where they can’t afford to waive anything anymore. I legit saw one prescription where the gross profit was in the negative because almost $20 was being waived by the pharmacy😩
Other reasons why I don’t like brand cards:
Brand name companies track your medication history at the pharmacy as well as your personal information (ie. name, address, date of birth etc) when these cards are used.
They’re not available forever. Eventually you’ll have to decide whether you want to continue getting the brand name at full cost or the generic version at a reduced price.
I’m not saying that these cards shouldn’t be available. In cases where a patient has tried multiple generics and find that they don’t work the same way, I’d offer one of these cards if available, especially if the patient doesn’t have other drug coverage. But I believe all patients have the right to know the difference between brand name vs generics, cost savings of choosing generics and implications and consequences of using these brand loyalty cards.
Sources:
Canadian Agency for Drugs and Technologies in Health. What are bioavailability and bioequivalence? https://www.cadth.ca/media/pdf/Generic_prof_supplement_en.pdf
Canadian Generic Pharmaceutical Association. 2016: Generic medicine saves $73-billion. http://canadiangenerics.ca/wp-content/uploads/5YearSavings12-16_ENG.pdf
Canadian Generic Pharmaceutical Association. 2016: The value of generic prescription medicines. http://canadiangenerics.ca/wp-content/uploads/ValueOfGenerics2017_Eng.pdf
Impact of brand drug discount cards on private insurer, government and patient expenditures. https://www.cmaj.ca/content/191/45/E1237
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