Adjustment to Ontario municipality’s drug plan ruled breach of agreement

An Ontario municipality violated its collective agreement when it changed the requirement in its health care plan allowing employees’ doctors to make exceptions to its policy of only paying for generic prescription drugs, an arbitrator has ruled.

The City of Barrie, Ont., provides an extended health care plan to its firefighters. The collective agreement has a provision that states that the plan requires “mandatory generic drug substitution (unless the physician directs that a generic substitute is not allowed for a valid medical reasons).” The collective agreement also allows the city to “change the carrier of any benefit plan provided that it is at least equivalent to the present benefits provided in the collective agreement.”

In 2005, the city changed its benefits provider from Canada Life to Sun Life. The contract with Sun Life included a generic limit provision that stated any charges that were “in excess of the lowest priced equivalent generic product are not covered unless the doctor specifies in writing that no substitution for the prescribed drug may be made.”

The city covered brand-name prescription drugs when a physician simply wrote “no substitution” on the prescription. On Dec. 30, 2014, the city informed the union that it planned to change this practice and generic substitution of drugs would be mandatory unless the physician specifically directed that a generic substitute was not allowed for valid medical reasons. However, the city continued to pay the full cost of brand-name drugs if the physician only wrote “no substitution.”

Nearly two years later, the city once again expressed its intention to change the practice, but it didn’t follow through as it would require issuing a drug card to all employees for the purposes of direct billing.

Another two years passed and in November 2018, the city sent a memorandum to all members of the bargaining unit that mandatory generic substitution would be implemented for all prescribed drugs “unless your doctor directs that a generic drug substitution is not allowed for valid medical reasons” as of Jan. 1, 2019. If an employee’s doctor made such a direction, they would have to complete a drug exemption application form and submit it to Sun Life.

The union filed a grievance claiming that the city unilaterally changed its longstanding practice of mandatory generic drug substitution and violated the collective agreement’s right to physician authorization of brand-name drugs. It also argued that the change allowed the third-party insurer, not the physician, to decide if a generic substitution was appropriate.

On Jan. 1, 2020, the city once again changed its benefits provider to Green Shield, which also required a drug exemption application form for brand-name prescription drugs.

The arbitrator noted that the acceptance of a simple “no substitutions” note on an employee’s prescription was accepted as valid medical reasons for 15 years and through multiple rounds of collective bargaining before the city first raised any concerns about it.

The arbitrator found that the city’s change essentially replaced “straight-forward, front-end physician approval for a generic drug exception” with “downstream review and the opportunity for rejection by a benefit provider” and agreed with the union that this transferred the decision on whether a generic drug substitution would be permitted from the physician to the insurer.

In addition, the drug exemption application form required detailed medical information that hadn’t been required previously and added cost to employees who had to pay for their doctor to complete the form. These changes were substantive and required discussion with the union, not unilateral implementation, the arbitrator said.

The arbitrator also found that the substantive change violated the collective agreement’s requirement that any change in insurance providers must be “at least equivalent to the present benefits.” The grievance was allowed.