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Strategies to Increase Generic Drug Utilization and Associated Savings

Pharmaceutical spending has been rising rapidly in recent years, and prescription medicines have quickly become a target in the struggle to contain health care costs. One increasingly attractive option to reduce costs is to encourage the utilization of generic drugs, which are typically as little as one-third the cost of their brand-name counterparts. The apparent safety and savings associated with generic drugs have not gone unnoticed—many health insurers, pharmacy benefit managers, and public health programs are adopting strategies that encourage generic utilization.

This AARP Public Policy Institute report describes and reviews evidence of the effectiveness of these strategies in the areas of

  • Generic substitution policies
  • Health plan benefit designs
  • Electronic prescribing (e-prescribing)
  • Consumer education
  • Prescriber education
  • Pharmacist/prescriber incentives
  • Drug pricing and pharmacy reimbursement
  • Prescription pad formats
  • Federal legislation

The savings associated with policies that encourage the utilization of low-cost generic prescription drugs make them an obvious choice in the struggle to contain health care costs. However, challenges remain before this approach can be optimized. (17 pages)

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