DRX Trends

Physicians, Patients Still Underutilizing Generic Drugs...at a $7.7 Billion Annual Cost for the Health Care System

We’ve previously discussed the benefit of generic drugs, which are therapeutically equivalent to brand name drugs and significantly more cost effective. Despite the known economic impact of generic drugs and the existence of generic substitution laws in all US states, physicians continue to prescribe brand name drugs out of sheer habit, according to a recent Washington Post article. The article is based on a study published in the American Journal of Medicine that analyzed the rate of ‘dispense as written’ prescriptions for beneficiaries of a large pharmacy benefits manager, finding that physicians designated 'dispense as written' for 2.7 percent of the 5.6 million prescriptions evaluated, with an additional 2 percent of prescriptions requested as ‘dispense as written’ by patients.

The authors estimated that, if each opportunity to substitute a generic alternative had been used over the one-month study period, the patients could have reduced their charges by more than $1.7 million and the health plans could have experienced savings of over $10.6 million. They further noted that:

“With more than 3.6 billion prescriptions filled in the United States annually, patient charges could be reduced by as much as $1.2 billion annually and health system costs could be reduced by as much as $7.7 billion by eliminating dispense as written opportunities.”

Generic drug substitution saves both patients and the system money, and it has the potential to dramatically reduce healthcare spending in the U.S. A Congressional Budget Office report found that generic drugs account for 70 percent of all filled prescriptions and make up savings estimated at $33 billion. Online prescription drug comparison tools, such as DestinationRx’s DrugCompare, encourage generic drug and therapeutic equivalent adherence. DrugCompare allows patients to easily access information on lower-cost alternatives to brand name drugs, allowing organizations to better control costs.

HHS Proposes New State Exchange Regulations

The 2010 Patient Protection and Affordable Care Act mandates that states implement health insurance exchanges—online marketplaces to purchase and sell health insurance—by January 2013. Recently, the Department of Health and Human Services (HHS) eased the requirements for implementing these exchanges in a proposed rule that introduces a framework to provide greater flexibility and assistance in building health insurance exchange websites. The Los Angeles Times states that the proposal is a reaction to resistance by the states and will provide individual states with the power to decide how insurance companies will be regulated. According to Information Week, a key aspect of the proposal is the issuance of “conditional approval” of state exchanges that would not be fully operational by 2013, provided that the state appeared to be making sufficient progress toward becoming fully operational by January 2014. Modern Healthcare explains that the proposed regulations also outline the minimum coverage health plans must provide to participate in a state exchange and which companies may purchase coverage through a state exchange.

As the largest Medicare plan exchange, DestinationRx has unique insight on how to effectively implement and operate health insurance exchanges. Last month, Executive Vice President Jim Yocum shared how DestinationRx’s experiences can be applied to the implementation of state exchanges at the AHIP Exchange Conference held in conjunction with AHIP’s Institute 2011. Developing state exchanges is a challenging path, but the success of the Medicare plan exchange shows us that plan comparison and enrollment technology has the potential to reduce costs for health plans and consumers.