Mr. Lamb is a freelance pharmacy writer living in Virginia Beach, Virginia, and president of Thorough Cursor Inc.
Aetna's Save-a-Copay program was launched on a trial basis in 2006 and is also open to beneficiaries with prescriptions for statins, nonsedating antihistamines, and proton pump inhibitors. Although more generous than most, Save-a-Copay is just one of a growing number of initiatives private insurers and pharmacy benefit managers (PBMs) have undertaken to promote generic drug use as a means of lowering costs for themselves and patients2 (Table).
Jeffrey Holmstrom, DO, medical director of Anthem Blue Cross and Blue Shield in Maine, explained, "The launch of [our] GenericSelect [program] not only provides members with an expanded list of quality, prescription medications, but also offers substantial savings to those members who choose to switch to generics. While savings will vary by plan, on average, members may expect to save $15 to $40 per month."3 Basing cost-sharing amounts on the brand or generic status of products and encouraging mail-order prescription filling are among the other cost-saving strategies payers are employing.
The efforts are paying off. In January 2007, the Centers for Medicare & Medicaid Services reported that health care spending data for 2005 indicated that "growth in retail prescription drug sales decelerated for the sixth consecutive year, increasing just 5.8% in 2005, following 8.6% growth in 2004 and 10.6% in 2003. This slowdown was primarily due to a dramatic decrease in Medicaid prescription drug spending, along with increased use of generic drugs."7
Generics already constitute more than half of the prescriptions covered by private insurers. Aetna, for example, reported that 59% of the drug claims it processes are for nonbranded products.1,5
Plans' generic fill rates (GFRs) are likely to grow even more in the next few years because, as a Medco-sponsored survey of 200 midsize insurers revealed, "nearly 70% of respondents believe stronger incentive programs, including those that require or encourage the use of generics, will have the greatest impact on controlling plan costs." The survey also found that 98% of prescription drug plans employed "methods that encourage the use of generics and plan-preferred brands."8
The principal cost-containment strategies used by plans are mail-order pharmacy and tiered copays. Some 90% of plans promote filling prescriptions via mail, and 38% require mail order for some prescriptions. According to an Express Scripts study, 80% of for-profit and not-for-profit insurers have 3-tier copayment plans, which were shown to have the greatest potential of encouraging the selection of generic products.9
Among 3979 Express Scripts?affiliated plans, those "with a generic-versus-brand copayment differential of $21 or more used generic drugs at a rate 5.2 percentage points higher than plans with a $0-to-$5 differential. Plan sponsors with copayments tiered at 3 levels—generic, formulary brand, nonformulary brand—had generic fill rates of 1 to 2 percentage points higher, compared to flat dollar 2-tier or coinsurance."10
Like insurance plans, PBMs are reporting large gains in GFRs and projecting further growth, especially as more blockbuster drugs come off patent. Laizer Kornwasser, Medco Health Solutions senior vice president of channel and generic strategy, recently observed, "The savings opportunity for patients and payers is enormous, and it's happening as Americans are recognizing that generic counterparts to these brand drugs are just as safe and effective. Consolidated generic dispensing rates will likely exceed the 60% range in the near future."11
Medco, which offers flat $5 copays for generic drugs, currently fills 55.2% of the prescription orders it receives with generics. In 2002, the company's GFR was 40.5%.11 Similarly, Express Scripts' overall GFR for 2006 was 59.7%, after standing at 41.7% in 2002. For individual products, generics can account for nearly all dispensed prescriptions.12,13
Reliance on mail order is also boosting GFRs. Kornwasser noted that "through our mail-order pharmacy, we can achieve a 95% generic substitution rate within the first week of the brand losing patent protection."11
John Figueroa, president of US pharmaceutical distribution for McKesson, which claims to be the largest purchaser and distributor of generic drugs in the world, told attendees of the McKesson Pharmacy Strategies Conference and Tradeshow in June of 2006 that "the opportunity to capitalize on generics is very exciting." He specifically pointed at his company's Generic Utilization Diagnostic and GenericSelect programs, which facilitate rapid ordering, delivery, and substitution of generic drugs, as initiatives that allow pharmacies and patients to save money while meeting health needs.14