PHARMA & BIOTECH BUSINESS ALERT
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Study recommends more focus on generic drugs to reduce healthcare costs
Research by Express Scripts, a pharmacy benefit management company, reveals how changes to prescription benefit copayments can reduce healthcare costs through greater use of generic drugs without shifting costs to consumers.
"A study released today, based on an analysis of 2004 prescription claims, indicates a pharmacy benefit plan design that increases the differential between brand and generic copayments by $10 can expect to achieve a 3 to 4 percentage point increase in the generic fill rate, which can translate into a 3 to 4% savings in drug costs," says Jake Cedergreen, director, benefit design and modeling.
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The study indicates that the difference between a plan's generic copay and brand copay is a key driver in increasing the use of generic drugs. Cedergreen suggests that "this is another example of how benefit design can effectively reduce drug costs by aligning the interests of the member and the plan sponsor around the low-cost prescription alternative."
When copayments for generic medications are slightly reduced and copayments for brand medications are increased by the same amount, the average plan can typically achieve "member fair share" and an appropriate brand/generic differential without increasing the overall cost to members.
Member fair share ensures that members pay an equal or lower percentage of the drug cost when a low-cost prescription alternative is selected and can be used to evaluate the effectiveness of a plan's copay differential.
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"Given the significant generic opportunity in front of us, the research points to copay differentials as a key driver for increasing generic fill rates," explains Cedergreen.
More than $50 billion worth of branded drugs will lose patent exclusivity over the next 5 years. In the next year alone, $11 billion in drug sales are expected to lose patent, with generic alternatives becoming available for at least 15 branded drugs. The largest-selling drug losing exclusivity in 2006 is Zocor, the cholesterol-reducing blockbuster that posted more than $3 billion in U.S. sales in 2004.
A copy of the study is available at www.express-scripts.com/ourcompany/news/outcomesresearch/onlinepublications/.
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