Generic semaglutide sparks fresh debate over substitution

For most of the last decade, mandatory generic substitution was a settled issue in Canadian drug plan design. Plans had their policies in place, members understood the rules, and the whole system hummed along without much controversy.

But the arrival of generic semaglutide has forced plan sponsors and insurers to revisit a cost management tool that many had stopped thinking about and with it, the familiar tension between plan savings and member comfort around switching from brand to generic.

Yet concerns persist around generic substitution. Marie-Hélène Dugal, national drug strategy lead at Medavie Blue Cross, acknowledged that even with Health Canada's equivalence standards well established, patient reluctance to switch from brand to generic can produce its own problems.

"Just like the placebo effect, you might see what they're experiencing or they might be over aware of any potential negative effect they might be experiencing on the generic versus the brand," she said, underscoring Medavie backs Health Canada's safety and equivalence standards for generics and looks for clear clinical documentation before granting an exception.

An evidence-based approach for generics

“We need something that's really medically substantiated,” she added. “For example, if there's a non active ingredient present in the generic which wasn't present in the brand name drug and there's no other generic available without that non active ingredient. It could be a food dye; it could be something that someone has a documented allergy intolerance. It's really that type of thing that are the ironclad cases where of course we would approve an exception.”

Dugal acknowledged that she currently doesn't have member satisfaction data on mandatory generic substitution. However, the more common question Medavie fields is how plan members find out when a generic becomes available. There's typically a lag of weeks or a couple of months between Health Canada approval and the drug actually reaching pharmacy shelves, and Medavie waits until the product is readily dispensable before applying its interchangeability rules.

While Dugal underscored Medavie's policies are built on evidence, she acknowledged that evidence can and will shift over time. For example, she pointed to Concerta, a widely claimed ADHD drug in Quebec, as a case study in how perception can outrun the science. For years, there was a widespread belief that the generic was not truly equivalent, and even Quebec's public drug plan, RAMQ, allowed an exception, declining to apply its lowest-cost-alternative policy to Concerta despite generics being available.

However, that changed last December when RAMQ finally enforced the switch. Medavie has fielded a wave of exception requests since, but Dugal said the pattern is consistent.

"The story that we keep seeing is not that there’s a demonstration of evidence around this as a real risk, but it's certainly prescribers or parents or patients being uncomfortable," she said, emphasizing the challenge is separating legitimate clinical concerns from anxiety. She was blunt about where the insurer draws that line.

"We really want to consider the myth or perception or anxiety versus what does the evidence say?" she said.

Pharmacies play a key role in generic substitution

From there, the insurer leans on pharmacies rather than direct member outreach.

"This part of the process is really where we're counting on this partnership with pharmacies to help educate members," Dugal said, adding pharmacists often make the switch proactively, and when a brand-name claim hits Medavie’s system, it responds in real time to flag that a generic is now available. Semaglutide is getting different treatment given its status as the top drug by plan spend and the sheer volume of members taking it for diabetes.

To that end, Dugal was quick to highlight an underappreciated factor in generic uptake - the pharmacy itself. Different chains and independent pharmacies have their own policies on whether to proactively dispense generics, shaped in part by commercial interests. The result is that even plans without mandatory generic substitution see solid generic utilization, because pharmacies are often making the switch at the counter on their own.

Where biosimilars sit in the process

Biosimilars, however, operate under a different set of rules, she noted. Unlike small-molecule generics, biologics and their biosimilar equivalents have not been widely deemed interchangeable in Canada.

Many are complex therapies administered in infusion clinics tied to specific suppliers, with dedicated patient support programs attached. Switching typically requires a new prescription naming the specific biosimilar and may come with a different coordinator and program altogether.

"It's just very different environment overall," Dugal said.

According to Dugal, Medavie reviews each biologic-biosimilar pair on a case-by-case basis rather than applying a blanket mandate. Some plan sponsors have chosen to require biosimilar switches as soon as alternatives are available, and Medavie has supported those decisions with an in-house patient navigator who walks members through the transition. But most plan sponsors have opted to keep all options open.

"We're able to leverage certain manufacturer agreements, so product listing agreements that help offset these costs while providing access to more options for their plan members," she said.

Generics test plan sponsor substitution policies

Moreover, Dugal noted how the insurer has seen a sharp shift in interest in mandatory generic substitution.

"This year, and even starting a bit late last year, we're really seeing an uptick in interest in plans moving towards a mandatory generic because of the semaglutide generics," she said.

According to Dugal, Ozempic sits at the top of many drug plans by spend, and the number of members taking semaglutide for diabetes management is substantial. So much so that generic availability creates an obvious pressure point. Medavie has responded by making additional education templates and resources available to plan sponsors and advisors ahead of the switch to ensure "everybody is well informed," she said.

Dugal explained that Medavie's mandatory generic substitution policy works on a province-by-province basis. Once a generic is deemed interchangeable in a given province, the insurer cuts back claims for the brand name drug to the cost of the lower-priced equivalent. Members can still choose the brand, but they pay the difference out of pocket — or offset it through coordination of benefits or the manufacturer coupon cards that have become common.

 Adoption also remains high across Medavie's book of business, with mandatory generic substitution in place on 80 to 90 per cent of plans, signalling the debate over whether generics match brand-name drugs is long settled. She said most plan sponsors treat the policy as routine while the exceptions tend to cluster in a specific corner of the market.

"It typically tends to be where there's a unionized environment and where that's something that's being negotiated in a collective bargaining agreement," she said, adding larger employers with collective agreements often can't implement plan design changes unilaterally, which leaves mandatory generic substitution as a bargaining table item rather than an administrative decision.