Generic Drugs: The Opportunity that Must Be Realized

Never before has America had the opportunity to reign in prescription drug spending as it will in the next few years. The impact will be huge and the reason is quite simple: within the next five years, 70 brand-name drugs, including 19 blockbusters such as Zocor®, Zoloft®, and Ambien®, are expected to lose patent protection, accounting for more than $45 billion in U.S. sales. Given that the average price of an existing generic drug is 70 percent less than brand-name counterparts, Americans can save billions of dollars on prescription medications by switching from brand-name medicines to generics, as clinically appropriate. However, increasing use of generic medicines is more than meets the eye; there are significant attitudinal barriers to overcome, and plans must work hard to encourage consumers, physicians, pharmacists and health plan sponsors to consider using generics, when appropriate.

According to the Food and Drug Administration’s approved list of drugs, 75 percent of brand-name drugs have a generic counterpart, yet these lower-priced alternatives still only account for 53 percent of all prescriptions filled in the U.S. Although there is a growing acceptance of generics among consumers – The Medco Monitor™, a recent survey by Medco Health Solutions, Inc., found that 66 percent of 1,092 insured adults agreed that a generic drug is the same as the brand-name medication -- many patients are still not comfortable using a generic and others still consider brand name drugs to be superior.

Changing the brand mindset requires innovative educational programs and plan management strategies to encourage patients and physicians to choose generics, when clinically appropriate. Fortunately, there are tools available to help plan sponsors maximize the generic opportunities coming up.

Empowering Consumers
There are two necessary components for changing the brand mindset among patients: information and incentives. These are the cornerstones of consumerism, a benefit approach that is gaining in popularity among employers and health plans. The premise behind consumerism is that when patients are exposed to the true costs of health care, they make wiser, more cost-conscious decisions. But giving consumers more control over their health care dollars requires that they be well-informed about their choices. Education must be a key component in the push toward further generic usage.

According to The Medco Monitor survey, despite a growing willingness to take generic drugs, most Americans are not very knowledgeable about them. Consumers are not inundated with advertisements for generics like they are for brand-name dugs, so plan sponsors need to find a way to counter direct-to-consumer promotions.

Some plans are leveraging different communication channels, like the internet and direct-mailings, to educate consumers. An example of a Web-based educational tool is the Generic Medication Resource Center on medco.com®. The site includes a comprehensive, easily searchable database of brand-name drugs and their generic equivalents, allowing consumers to look up their brand name medications to see if a generic is available. It also provides members with plan-specific cost comparison information on generics so patients can see the actual price difference between generics and higher-priced brand name drugs. These online pricing tools have been shown to be particularly effective. In an analysis of health plan members who used medco.com, those members who viewed generic and brand name price comparisons were 60 percent more likely to switch to a generic drug than those who did not compare prices.

Another effective feature of the site promotes conversations about generics between the patient and the physician by providing a list of questions for patients to ask their physician when being prescribed a medication. That conversation is key. The Medco Monitor found that among patients who discussed generics with a healthcare professional, nearly 75 percent said their healthcare professional suggested they use a generic.

Direct-mail campaigns encouraging use of generic medicines are also highly effective in convincing patients to make the switch. According to another Medco survey, generic education campaigns employing targeted mailings increased generic conversion by 22 percent at a savings of $88 per switch per year. In this case, communications made all the difference as the plan did not use financial incentives to encourage generic use.

There’s no doubt that education is an effective tool for raising member awareness about generics and influencing decisions, but offering financial incentives to use generics, when clinically appropriate, can push even reluctant consumers to act on the knowledge they’ve acquired. For example, exposing members to the significant differences in price between generic and brand medications either through a co-insurance or co-payment structure can help drive generic usage. Plans that use co-pays need to ensure that the brand-generic co-payment difference is enough to provide a meaningful financial incentive for generic use. For guidance on what those differences should be, it’s helpful to look to a recent study of Medco clients that found that increasing the co-pay spread from $5 or less to $15-$20, led to a 17 percent increase in generic prescriptions, and upping the difference to $25 or more, resulted in a 25 percent jump in the number of prescriptions filled as a generic.

Another powerful tool for increasing generic drug utilization is through the use of mail-order pharmacies. Medco regularly achieves a near-95 percent generic substitution rate within the first week for new generic chronic-care medications dispensed through its mail-order pharmacies. This rapid uptake in generic usage can result in substantial savings for employers and members. Promoting the use of mail-order among chronic medication users should always be an integral part of a generic drug strategy. The incentive for consumers and plan sponsors is clear; a recent Lewin Group study showed that mail-service pharmacies provide savings of 10 percent compared to retail pharmacies.

Empowering Physicians
While patients can request a generic, ultimately it’s up to physicians to write the prescription. For many doctors, generics are not always top-of-mind. Just as consumers are the target of massive direct-to-consumer advertising, physicians are inundated with brand-name pharmaceutical information and free drug samples. Generic drugs can easily get lost in the brand-name clutter.

Staying abreast of all the available generic alternatives, as well as remembering the names of these medications, presents a serious obstacle to generic prescribing. To keep physicians up-to-date on generic availability, physicians need to be actively informed about generic drugs that are coming to market, especially those doctors who are the most-frequent brand-name prescribers of a specific drug that is going generic.

Another important tool for generic information is electronic prescribing, a system that allows physicians to generate prescriptions with the use of a PC or handheld device. While e-Prescribing is best known for its safety attributes, it also has the potential to make considerable gains in generic usage by providing physicians with generic drug reference and formulary information at the time of prescribing. While writing a prescription, physicians can look up the available generic alternatives and also can see what the cost difference will be for their patients. A Medco study of physicians using e-prescribing technology found that physicians using the devices increased their generic substitution rates by over 15 percent and their generic dispensing rates by more than 8 percent.

Another obstacle to generic prescribing is the physician’s sample closet. Free brand-drug samples are a common marketing tool used by pharmaceutical companies to promote their products. It’s no secret that patients will most likely remain on the medication they initially use as treatment, so supplying doctors with free brand-drug samples increases the chances that the medicine that has been sampled will be prescribed. To counter the brand drug detailing, Medco developed an innovative educational program called Generics First™ that uses this same technique to promote generic utilization by distributing free generic-drug samples to physicians so that they can begin their patients on a generic instead of a brand.

At the Leading Edge of the Turning Tide
Despite the obstacles, efforts to promote generic drugs are paying off. There are strong signs that consumers and physicians are considering generics now more than ever. Evidence of this evolution is seen in how quickly retail pharmacies began dispensing generics for several block-buster drugs that recently came off patent. According to a recent Medco analysis, when a generic version of the popular antibiotic Zithromax became available in mid-November 2005, retail pharmacies were filling over 90 percent of those prescriptions with a generic by the first week of January 2006; and dispensing rates for the allergy medication Allegra reached 80 percent at retail, 30 days after the generic was introduced.

These results prove the importance of an aggressive generic drug utilization strategy. In order to maximize the generic cost savings potential, plan sponsors must be vigilant in their approach, and encourage patients, physicians and pharmacists to always consider generics.