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Prescription Drugs: Generics Can Save Consumers Money

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By: Kara Malitsky, Pharm.D., R.Ph
October 7, 2011

As health costs escalate nationwide, consumers, employers and insurers are all looking for ways to reduce costs while maintaining quality.  Considering that prescription drugs costs are one of the fastest growing segments of the health care industry, it makes a great deal of sense to examine how the cost of prescription drugs can be better managed.

One way in which real savings can be realized is with generic drugs, which typically cost less than their name-brand counterparts.  In fact, the Generic Pharmaceutical Association estimates that by using generic drugs, consumers and the federal government (through Medicare and Medicaid) saved $931 billion in the past 10 years.  In 2010 alone, the savings was $157 billion.

The good news for consumers is that by the end of 2012, many well-known name-brand drugs are slated to lose their patents, which may result in never before seen savings from generic drugs.  For example, Lipitor, a popular cholesterol lowering medication, is slated to become generically available by the end of this year.  Zyprexa, used to treat schizophrenia and bipolar disorder, is also on track to become generically available in 2011.

Plavix, Seroquel, Singulair, and Actos are some of the major medications slated to be available generically in 2012.

These drugs are becoming generically available at a time when more patients and physicians are utilizing generics to treat disease and illness.  According to the U.S. Department of Health and Human Services, the generic prescribing rate in 2009 was nearly 75 percent, an increase from 57 percent in 2004.

As more patients use generics, they are realizing cost savings without suffering quality.  In 2009, according to data from the National Association of Chain Drug Stores, the average retail prescription price for a name-brand drug was $155.45, while the average retail price for a generic was $39.73, an average savings of $115.72 for consumers.  (However, it’s important to note that when a generic drug first arrives on the market, one generic manufacturer typically has exclusivity for six months, therefore there may not be an initial drastic drop in price until this exclusivity period has passed.)

As far as quality, generic drugs must meet stringent requirements in order to be approved as a generic version of a branded product.  First, the generic version must have the same active ingredient.  Further, the generic version must have the identical dosage form, strength, and route of administration as its brand counterpart.  Inactive ingredients may sometimes differ among the versions, but approved generic drugs are considered therapeutically equivalent to the brand versions.

Additionally, the U.S. Food and Drug Administration (FDA) reviews data to assure that the generic product will perform the same clinically as its respective name-brand name (or reference) drug. This standard applies to all FDA-approved generic drugs. 

Also according to the FDA, all generic manufacturing, packaging and testing sites must pass the same quality standards as those of name-brand drugs.  In fact, many generic drugs are made in the same plants as the name-brand drug.

Given the cost benefits and quality of generics, Blue Cross of Northeastern Pennsylvania, like many other insurers, offers customers and members a tiered drug formulary that includes a tier with generic drugs. The tiered formulary is designed to encourage physicians and patients to select the most effective drugs at the most cost-effective prices, which in many cases may be generics.

However, if patients are concerned about using generics, or have questions about when a name-brand drug may be generically available, they should talk with their pharmacist or health care provider.  As a general rule, though, consumers of name-brand medications have an incredible opportunity for savings when their medications become generically available.

Kara Malitsky is Director of Pharmacy Management at Blue Cross of Northeastern Pennsylvania and has more than 12 years of experience in the pharmacy industry. 

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