As the cost of medical care, including
pharmaceutical drugs, continues to
escalate, many businesses are looking for ways to save money on health care
costs. One way businesses can help keep
premiums down is by encouraging the use
of generic prescriptions.
“In 2005, consumers spent over $229 billion on brand-name drugs,” says Shawn F.
Barger, Pharm.D., director of Clinical
Pharmacy Management for Gainesville-based AvMed Health Plans. “Billions of dollars of brand-name patents will expire in
the next five years, which means that many
more generic drugs will become available.
These generics are virtually identical to the
more expensive brand name, but cost 20 to
80 percent less.”
Smart Business spoke with Barger about
the benefits of encouraging health plan
members to use generic prescription drugs
when they are available to help reduce premiums.
How does encouraging the use of generic
prescription drugs help save money on premiums?
When more members of a health plan use
generic drugs instead of expensive brand-name drugs, it helps decrease the overall
spending for pharmaceutical costs, which
translates into decreased premiums for the
employer or employees when renewal time
comes around. It also saves out-of-pocket
money for the employee since co-pays are
usually significantly less with generic prescription drugs; sometimes the co-pay is
even waived with generic drugs.
How much can an employer or its employees
save in premiums using generic prescription
drugs instead of brand-name drugs?
It varies, depending on the plan.
Research shows that for every 1 percent
increase in generic fill rate there is a
decrease of 1 percent in overall pharmaceutical costs. According to nationwide
study, there is a $20 billion missed savings
potential because of underutilization of
generics within the commercially insured
market.
The savings opportunity from increased use of generic drugs increases every year.
In the next five years, more than $50 billion
worth of branded drugs will lose patent
exclusivity; this year alone, generic alternatives will become available for over a
dozen branded drugs.
What are some of the more popular brand-name drugs that have significantly lower
generic equivalent costs?
Prozac, for example, was the No. 1 anti-depressant on the market. When its generic equivalent, fluoxetine HCL, hit the market, it provided enormous cost savings. A
month’s supply of Prozac costs about $218;
the generic costs about $25 today for the
same month’s supply. On average, however, a generic drug costs approximately 60
percent less than a brand-name drug.
Consumers also pay a lower co-payment
for generic medications, saving $15 or
more per prescription on average compared to branded medications.
Are generics the same quality as brand
names?
There are stil misconceptions about
generics that may have to do with some
earlier experiences with generic drugs.
Generics have come a long way over the
past several years and often are chemically
identical to the brand names. In fact, many
generics are now being manufactured by
the original brand-name pharmaceutical
and repackaged as a generic. Today, there
are generics available to treat every common condition, including stomach ulcers,
inflammation, depression, high blood pressure and high cholesterol.
Doctors are the ones, ultimately, who
determine if a generic drug meets the need
of a patient. The goal is for doctors to use
brand drugs only if there is a clinical value
that is not available with other drugs that
are generic.
What can an employer do to encourage the
use of generics among employees on a company health plan?
When reviewing a health plan for employees, select brand tiers with high co-pays
and keep the generic co-pay low. Also, consider choosing benefit options that charge
a fee if a member chooses the brand manufacturer of a drug when a generic is available. Employers can also encourage the
use of generic prescription drugs by keeping their workers informed about the cost
benefits of using generic drugs. This kind
of information is often readily available
from your health plan to distribute to
employees. Many health plans also have
helpful Web sites available that allow members to compare brand-name and generic
prices right online.
And, remember that pharmacies themselves often encourage generics; in Florida,
for example, a pharmacy will fill a brand
prescription automatically with a generic
unless the doctor writes ‘brand only’ on the
prescription.
SHAWN F. BARGER, Pharm.D. is the director of Clinical
Pharmacy Management at AvMed Health Plans (www.AvMed.org)
based in Gainesville, Fla. Reach him at (352) 337-8517 or
[email protected].
