AARP Paper Details Ways to Increase Generic Drug Use

Source: AARP Press Center | 2008-12-17

December 17, 2008

Contact : Jordan McNerney or Jim Dau 202-434-2560 jmcnernery@aarp.org OR jdau@aarp.org

WASHINGTON—A new report by AARP’s Public Policy Institute details strategies used to increase the use of generic prescription drugs, which are typically as little as one-third the cost of their brand name counterparts. Despite consistent increases in brand name drug prices, the prices of generic alternatives have fallen in recent years. The report notes that every one percent increase in generic drug use could yield as much as $4 billion in savings to consumers and the health care system.

“Ever since generics really began to enter the market in the 1980s, they have saved Americans billions of dollars in health care bills by bringing affordable, accessible alternatives to the marketplace,” said AARP Policy Director John Rother. “Generics have proven to be a bright spot in a health care system where most costs consistently skyrocket.”

Among its findings, the report shows the strong success of generic substitution policies that encourage or require pharmacists to fill brand name drug prescriptions with equivalent generic drugs. This type of policy was used to reduce the Massachusetts Medicaid program’s spending on brand name drugs with generic equivalents from more than $10 million per month to less than $300,000 per month. Generic substitution policies can also help consumers save money by indirectly guiding them toward prescription drugs that typically have lower copayments.

Private insurance plans, including many Medicare prescription drug plans, have also encouraged the use of generic drugs by assigning higher copayments to brand name drugs. The report shows that copayments for brand name drugs have risen by $9 or more since 2000, while generic drug copayments have increased by less than $2. Some insurance plans have even started waiving copayments entirely for certain generics, making them even more appealing to cost-conscious consumers.

The report notes that consumers who are prescribed a new drug are far more likely to continue taking it when the original prescription is filled with a generic. Maintaining an appropriate drug regimen keeps patients healthier and can prevent the need for more expensive treatments in the future.

Research has also found success in using electronic prescribing, or when prescribers generate prescriptions using a personal computer or handheld device, to increase generic drug use. These systems can provide prescribers with immediate access to information about the availability of generic alternatives when they are writing prescriptions. The report notes that one group practice raised its generic prescribing rate from 65 percent to 73 percent less than two years after they began using e-prescribing, resulting in $4.75 million in annual savings. AARP strongly advocated for the e-prescribing provisions in the 2008 Medicare Improvements for Patients and Providers Act, which will offer incentives for widespread adoption of electronic prescribing.

AARP’s report also notes several examples of successful efforts to educate consumers and prescribers about the availability and benefits of generic drugs. One health plan saved an estimated $13 million in drug costs by investing $1 million in a comprehensive consumer education campaign. The report also finds promise in academic detailing, or when independent consultants visit prescribers and provide evidence-based information about drug effectiveness to promote the use of lower-cost generic drugs. One program in Louisiana is credited as a key contributor to a 7.2 percent increase in the state’s Office of Group Benefits’ generic utilization rate.

Rother added, “We can all help to bring down health care costs, just by asking our doctor or pharmacist if a lower cost generic drug is available every time we get a prescription. And we should continue to push Congress, the White House and our state houses to improve access to generic drugs, so more Americans can afford the prescriptions they need to stay healthy.”

AARP is working in Washington and throughout the country to make generic prescription drugs more accessible and reduce health care costs. As Congress takes up health care reform next year, the Association is encouraging lawmakers to create a pathway for approval of generic biologic drugs. Used to treat severe conditions like cancer and anemia, biologics are some of the most cutting-edge drugs available—and the most expensive. By allowing the FDA to approve generic versions of biologics, we can increase competition and drive down the cost of these therapies.

The full report, “Strategies to Increase Generic Drug Utilization and Associated Savings,” is available at http://www.aarp.org/research/health/drugs/i16_generics.html.

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