Generic Substitution - 26.10.2011

When you use a generic drug instead of a brand name drug, it means everyone - you, the company, and the insurer - pays less while you still receive the same treatment you would with a brand name drug. That’s why some company drug plans only reimburse employee drug expenses based on generic cost, when there is a generic equivalent. This more cost- effective approach can lower the cost of providing drugs (a cost that is sometimes shared with employees), while still properly treating the patient.

Certain medications do not have generic substitutes in which case the company drug plan usually pays for the brand name drug. Sometimes, even if there is a generic substitute, a doctor may insist that the individual take the brand name drug and that is usually also acceptable.

Employee Co-Pay: Sharing the Cost of Drugs

 A drug plan is often the most expensive component of an overall benefit program. Unfortunately, the cost goes up every year due to a number of factors: new and more expensive drugs, a ban on lower priced generic substitutes until a new drug’s patent expires, increased use of drug plan benefits by aging baby boomers and more.

As costs escalate, many employers have no choice but to implement cost controls on their drug benefit plan, such as reimbursing employees for only a drug’s generic equivalent. But another way is to share costs through employee co-pay. In this way, both employer and employee share the responsibility of appropriate drug purchases.

An employee co-pay plan may include one or all of the following:

Shared premium costs.

Employers and employees share premium costs for overall health benefits (including drugs), for example, employers pay 80%  and employees pay 20%.


Shared drug cost

Employees pay a percentage per prescription; employers pay the remainder.


Set fee

Employees pay a fee for each purchase, for example, employees pay $5.00 per prescription. The remainder is employer paid. 

Annual dollar maximum.

Employees pay for their drug costs after the maximum is reached.

What you can do to help...

Even if a group plan does not require employee co-pay, there are actions that employees can take to ensure we all better manage the costs of drugs. In that way, perhaps we can reduce the likelihood of initiating employee co- pay or increasing the current contribution amount.

If your doctor prescribes a new drug, ask if you can begin with a two-week trial period before filling a long-term prescription. That way, you can test it first for effectiveness.

If you are on long-term medication, fill a 90-day supply, if possible, so as to save on the associated pharmacy fees.

Make sure you take your medicine as prescribed. If you don’t comply with your doctor’s orders, you may compromise your health. Not only might you require more treatment, but you may also incur unnecessary costs.

Shop smart. Look for a pharmacy with a lower dispensing fee. If you share the cost of dispensing fees, you’ll pay less. Even if you don’t share the cost you’ll be doing your part to manage drug costs and reduce the likelihood of an increased employee co-pay.