Using Generic Drugs Saves Money... A Lot of Money

We know that trying to fear monger about comparative effectiveness research in the stimulus bill was just the warm-up act for the pharmaceutical industry.  A campaign pledge for the president (and many Democratic members of Congress) was to encourage the use of generic drugs in Medicare Part D, something PhRMA is already planning a multi-million dollar ad campaign to combat.  But they're wrong - taking steps to make it more likely that a patient will receive a generic drug than a brand-name drug has been demonstrated to save a lot of money, and not just in the big city.

Lewis, Jefferson and St. Lawrence County are part of New York State's "North Country" along the Canadian border.  They're huge, spread out areas, with a combined population no bigger than that of Fort Wayne, Indiana.  They're exactly the regions of upstate New York that have worrying issues of access to health care services.  They're also a far cry from the cities where a lot of progressive health care experiments take place.  But the three counties also saved $14.55 million on prescription drugs in 2008, according to a report from Excellus BlueCross BlueShield.  The reason why?  State laws that promote the use of generics over brand-name drugs.  It's the easiest $15 million you can make.

In 1987, New York State passed a law to dramatically increase the use of generic drugs.  If you come to your pharmacist with a brand-name drug and there is an equivalent generic in the FDA's "Approved Drug Products with Therapeutic Equivalence Evaluations" book, your pharmacist is empowered to automatically give you the much cheaper generic.  Your physician's primacy is preserved - if your doctor meant you only to have the brand-name drug, he or she can write "Dispense as written" on the bottom.  But studies have shown that many doctors may not be aware of the generic alternatives.  Even more likely, years of aggressive advertising may mean the doctor can only remember the brand-name drug, even though there are clinically-tested, much cheaper generics out there.  Making generics the default option corrects this marketing-induced bias.  It also prevents the worse aspects of direct-to-consumer marketing - patients can't force the pharmacist to give them the brand-name instead of the generic; only doctors can.

As such, generic use is very high in Central New York - 59.6% of prescriptions in 2007, and 64.7% as the economy.  And if you add all 39 upstate New York counties included in the report, the total savings are eye-popping:  $369 million in 2008.  All without any appreciable difference in health outcomes, all with giving doctors a free hand to deliberately choose the brand-name rather than defaulting to it, and all leading to less out-of-pocket expenses (particularly important for those in the Medicare Part D "doughnut hole").

So someday soon, PhRMA and Montel Williams will take to your airwaves telling you that preserving free choices is more important than encouraging the use of generics.  But their numbers just won't add up.

(Photo credit:  NNECAPA on Flickr.)