Healthy Skepticism Library item: 1663

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Rovner J.
Generic Drugs Could Cut Cost of Medicare Benefit
2002 Jan 31
http://story.news.yahoo.com/news?tmpl=story&cid=594&u=/nm/20020131/hl_nm/drugs_2

Notes:

Executive Summary

http://www.gphaonline.org/pdf/brandeis-study.pdf

Complete Study

http://www.gphaonline.org/pdf/brandeis-text.pdf

Press Release

http://www.gphaonline.org/pdf/brandeis-pr.pdf

Full text:

WASHINGTON (Reuters Health) – More appropriate use of generic medications, particularly to treat ulcers and arthritis, could reduce the price tag of a Medicare prescription drug benefit by more than 16%, according to a study released Thursday. That could reduce the estimate for plans currently under consideration by $50 to $100 billion.

“Considerable savings can be achieved through use of generic medications at a rate that is currently being realized in private sector programs through the use of most effective generic incentive initiatives,” according to the study by researchers from the Schneider Institute for Health Policy at Brandeis University.

Researchers Stanley Wallack, Grant Ritter and Cindy Thomas used data provided by AdvancePCS, the nation’s largest pharmacy benefit management firm, to calculate what percentage of drugs used by the Medicare-eligible population is generic.

Pharmacy benefit managers are companies that contract with insurers to structure and deliver prescription drugs in a cost-controlled way.

They found that boosting the rate of generic use to the level used by “benchmark” plans—roughly 50%—would reduce per-person drug spending from $1,647 to $1,377, and save a total of $250 billion between 2003 and 2012.

“This makes a good benefit more feasible,” said Wallack at a briefing held by the Generic Pharmaceutical Association, which sponsored the study.

The study found that nearly half the savings could come from increased use of generics to treat ulcers and arthritis—two conditions for which brand-name drugs are now most heavily advertised. Wallack said that health plans that use larger proportions of generics use not only “tiered copayments” that give consumers a financial incentive to use cheaper medicines, but also comprehensive physician education programs, including “counter-detailing” to demonstrate to practitioners that newer, more expensive drugs are not always better or more appropriate.

Sen. Charles Schumer (D-NY), who with Sen. John McCain (R-AZ) is sponsoring legislation that would make it easier for generics to get to market, said the study “will give impetus” to the measure. Schumer said he has seen interest in the bill—which would make it more difficult for brand-name drugmakers to delay generics—increase in recent months as legislators have started to come to grips with just how much the Medicare drug benefit they promised in the last election might cost.

“If you can reduce the cost of such a plan by $100 billion” through better use of generics, Schumer said, “that is truly a significant savings.”