Maximizing Generic Drug Use

Increasing generic drug use is considered one of the most efficient means for plan sponsors to reduce drug benefit costs. Generic drugs generally are much less expensive than their brand counterparts.

If increased generic drug use is a plan sponsor's goal, the most effective way to accomplish this is to assign patient financial incentives; where appropriate. These incentives normally take the form of increased cost sharing. If the patient requests a brand drug when a generic version is available and appropriate, the patient pays more out of pocket. If the patient accepts the generic drug when it is available, the patient pays less. Some benefit plans are designed to allow the prescriber to indicate that the brand drug is necessary and that the generic version should not be used. In this circumstance, the patient is not penalized.

The percent of plan sponsors that require their beneficiaries to take the generic or pay a penalty regardless of the situation is increasing. According to 2000 Wyeth-Ayerst report, 39% of plans now require this, which is up from 20% in the 1998 report.

Ostensibly, the need to receive the brand version of a drug should only exist if the patient has an allergic reaction to some non-essential component of the generic drug or if the generic drug proves to be ineffective. The reality is that many prescriber requests to dispense the brand are due to either the prescriber's lack of faith in generic drugs or the prescriber bowing to the patient's request to prescribe a brand drug.

This unnecessary use of brand drugs impacts plan sponsor costs. PBMI estimates that plan sponsor's costs are 2% to 3% higher when the plan sponsor does not require the patient to pay a penalty for brand drug use in circumstance defined above.

One plan sponsor has found an interesting solution to this problem. Before the plan agrees to waive the cost-sharing penalty, the prescriber must document the reason why the brand is required (i.e., some failure by the generic drug). This reason must be documented on a form that, in theory, could or should be filed with the FDA. This requirement provides a mechanism through which patients who truly need to take a brand-name drug can receive the brand, but which creates barriers to abuse.

Obviously, this solution isn't for everyone. Many plan sponsors, for internal reasons, would rather pay for the brand drug than inconvenience their beneficiaries. Also, there is a cost for processing those requests, whether it is performed internally or by the PBM. However, depending upon the extent of the problem, the plan will realize some savings.

There are many potential solutions to this problem. Have your PBM review your utilization to determine the savings opportunity. Ask for their recommendations about the best ways for to increase generic drug use among your plan members.