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Reference Drug Program: FAQs

What impact do reference drug programs have on patients?

Reference drug programs and policies of reference-based pricing restrict patient access to medications prescribed by their physicians. When reference drug programs include policies of therapeutic substitution, the impact on patients can be particularly harmful.

What is Reference Based Pricing?

Public and private drug plans use reference-based pricing policies to contain costs. Under reference-based pricing, reimbursement for the cost of the medication(s) is based on the assumption that certain medications within a specific drug class are interchangeable, having the same therapeutic benefits; therefore, a common level of reimbursement can be established. Reference-based pricing policies apply to drugs that are within the same class and considered therapeutically equivalent, but are different chemically and structurally.

What is Therapeutic Substitution?

Therapeutic substitution is a type of reference-based pricing policy. A policy of therapeutic substitution affects patients starting new medications, as well as patients already on medications. Under therapeutic substitution policies, if a patient is starting a medication for the first time, they are forced to begin with the reference medication, even if this was not the one prescribed by their doctor. Or, if patients are already taking a medication, a policy of therapeutic substitution forces them to make a medically unnecessary switch from the medication prescribed by their doctor to another medication that is chemically different, but within the same therapeutic class of medications.

Under some therapeutic substitution policies, such as the one currently used for proton pump inhibitors (PPIs) in British Columbia, patients are not able to pay the difference between the reference drug and the one prescribed by their physician. This means that if a patient chooses to stay on the drug their physician prescribed all costs for the drug come directly out of the patient's pocket.

Under the current therapeutic substitution policy in British Columbia, even if a patient chooses to pay the full cost of the drug their doctor has prescribed, this does not count toward their public drug insurance deductibles that all BC residents who rely on the public drug plan have to pay.