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Pharmaceutical benefits

Unsustainable growth

Prescription drug plan costs continue to increase rapidly in Canada for many reasons:

  • An aging population – with more chronic medical conditions.
  • Earlier diagnosis and treatment of health problems.
  • Availability of new and more expensive drug treatments.

We're taking action by delivering:

Value – managing risk proactively through clinical expertise, negotiating with pharmaceutical partners, pricing effectively, and integrating with public plans.

Change – maintaining leadership in the industry through collaboration and by influencing public policy.

Innovation – enhancing the benefit plan experience with flexible solutions.

Help in managing drug plan costs

As part of our commitment to bending the benefits cost curve, we continuously review and develop ways to manage the impact of increasing drug costs on your group benefits plan. We offer a suite of drug plan features and options that help to lower drug plan costs.

A ground-breaking drug plan solution.

Our Evidence-based drug plan (EBDP) goes beyond ‘open’ and ‘traditional’ formularies with an innovative multi-tiered model. This allows for plenty of choice and reimbursement to plan members for virtually all prescription drugs.

What is an EBDP?

Unlike traditional managed formulary plans, an EBDP doesn't limit access to specific drugs. Instead, the plan covers reimbursement for almost all drugs, but encourages smart choices by reimbursing more cost-effective drug treatments at higher levels.

Mandatory generic substitution ensures that all claims for drugs with a generic version are cut back to the lowest-priced equivalent, even if “no substitution” is indicated on the prescription. Employees will be required to pay the difference if the higher priced alternative is dispensed.

What is a generic drug?

A generic drug is a product that contains the same medicinal ingredients as it's corresponding brand name drug. Health Canada approves all generic drugs for safety, effectiveness and quality, using the same standards for generic-equivalent medication as for brand name drugs. 

Our prior authorization (PA) program targets a limited number of drugs and requires that these drugs be pre-approved for coverage.

How it works

At Sun Life, our PA criteria is written by our clinical pharmacists in collaboration with our global medical team. This ensures the criteria provides access to the therapy for those plan members who would benefit from it the most.

Prior authorization also helps confirm that the plan member meets our clinical criteria for that drug which may include trial of other treatment options.

One of our key strategies for bending the benefits cost curve on drugs is leveraging our scale to negotiate discounts with pharmaceutical manufacturers. These arrangements – known as product listing agreements (PLAs) can help:

  • lessen future pool charge increases,
  • balance plan sponsors’ needs for drug plan sustainability with plan members’ access to effective therapy, and
  • lower the drug costs for the plan sponsor and, in some cases, even plan members, directly at the point of sale. The plan members must use their pay-direct drug card at the pharmacy of purchase for the savings to apply.

The impact of PLAs is substantial. Over the past five years, we’ve saved plan sponsors and their employees more than $100 million.

For more information on how we are building relationships in the pharmaceutical industry to bring costs down, please download our brochure Bending the benefits cost curve – Pharmaceutical discounts.


Drug costs remain the largest group benefits plan expense, with the threat of even higher costs to come. The Reference Drug Program (RDP) serves as another layer in our drug cost savings strategy, along with prior authorization (PA) programs and product listing agreements (PLA).

Our provincial integration program is designed to help our Clients manage drug costs by ensuring that plan members access coverage opportunities available under provincial pharmacare and/or specialty drug programs, where appropriate.

We integrate coverage through a 2-tier provincial programs coordination system:

  1. “Tier 1” integration ensures that claims are directed to basic government pharmacare programs based on age or income. Examples of such programs include BC, MB and SK Fair PharmaCare, Alberta’s Coverage for Seniors, and Ontario’s Drug Benefit Program for seniors.
  2. “Tier 2” integration or our “Provincial Disease Program (PDP)” ensures that members apply to provincial drug programs for coverage of special/exceptional authorization drugs.

Expanded integration focuses on directing claims to specialty drug programs. Examples include specialty programs for MS, HIV, Cancer and rare disease programs.

Our Drug Risk Management (DRM) program reviews:

  • all new drugs, and
  • existing drugs approved by Health Canada for use in a new disease area (or for new medical conditions).

How it works

DRM helps us determine whether these drugs should be:

  • covered under the plan as regular benefits,
  • covered under the plan but subject to the prior authorization program if applicable, or
  • excluded from the plan for specific or all conditions.

As the drug landscape evolves, we review our coverage for drugs. For example, if Health Canada approves a drug for a new condition, we'd evaluate the drug again for that condition.

We assess the eligibility for drug reimbursement based on factors such as:

  • comparative analysis of the drug cost, its clinical effectiveness and safety profile.
  • availability of other drugs on the market to treat the same condition.
  • plan sustainability.

Drugs under review are not eligible for coverage. After approval, we pay drug claims only on or after the date we added them to the plan.