Generic push: More paperwork, more justification

With pharmaceutical costs on the rise, physicians are under more pressure to explain why they're recommending specific drugs and to fit those prescriptions into a health plan formulary.

By Mike Norbut — Posted March 6, 2006

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Popular brand-name drugs such as Zocor and Zoloft are losing their patents this year. Patients are enrolling in high-deductible health plans and health savings accounts, making them acutely aware of the price of prescriptions. And health plans are encouraging patients to ask their physicians for generic medication and even structuring formularies to steer them that way.

What does this mean for physicians? A whole new layer of practice management issues, more time to spend on administrative work and more pressure to consider cost in treatment.

Whether it involves enumerating the advantages of taking a brand-name drug over a generic or counseling patients on ways to trim their prescription drug costs, doctors can expect to spend more time on a subject for which historically they have not been questioned.

They also will have to deal with pharmaceutical sales representatives hoping to preserve some market share for their products or pitching a reformulated version of the old drug. Doctors even will have to be well-versed in various health plan formularies, since what they can prescribe often will be dictated by what the insurer allows.

In short, conversations no longer will be just about what works, but what's more affordable and what provides the best value, experts said.

"Doctors will have to know more about cost," said Devon M. Herrick, PhD, a senior fellow with the National Center for Policy Analysis in Dallas. "More often than not, they don't know the cost. Often, when you go to the doctor, he goes to the supply cabinet and pulls out samples."

Some physicians already have noticed the differences in their practices. Patients are arriving with more questions, particularly about drug costs, and they're armed with more information from their own Internet research.

Anticipating the detailed queries, Associated Family Medical Consultants in Fort Wayne and Churubusco, Ind., posted a sign asking patients to bring their formulary booklets with them to their appointments, said Thomas A. Kintanar, MD, a family physician with the group. The questions have resulted in longer appointments, he said.

"It's going to be a challenge for a lot of physicians as they try to help adjudicate or explain the differences," said Dr. Kintanar, who is on the board of the American Academy of Family Physicians. "Patients will have increased wait times. There may be some doctors who have to stay later and adjust their schedule."

The growing power of generics

Slowly but surely, the business of generic drugs is eroding the power wielded by brand-name pharmaceutical manufacturers, due in part to expiring patents, health plan pressure, and pharmacy substitutions.

Doctors sit on both sides of the fence in the prescription drug debate. Some argue that a brand name's high price is justification for the years of research that went into perfecting the drug, while others see the costs as contributing greatly to the affordability dilemma facing the health care industry today.

There's a pretty standard pattern to a prescription drug's product life. After years of research and trials, a drug hits the market with much fanfare and promotional gusto, as the manufacturer looks to make an immediate splash. Once its patent expires, however, it loses a portion of its market share to a cheaper generic equivalent -- that number can vary widely.

Still, while generics are gaining in popularity, health plans and pharmacy benefit management companies are pushing for patients to purchase them at an even more frequent pace.

According to a report published by St. Louis-based pharmacy benefit manager Express Scripts, consumers could have saved $20 billion in 2004 simply by using generics. For example, in the gastrointestinal drug category, generics were prescribed at only a 31% rate. Using more generics in that category alone could have saved $5.4 billion, according to the report.

Meanwhile, BlueCross BlueShield of North Carolina is waiving patient co-payments if they purchase generics. The insurer estimates the program, which it initially tested in 2004, will save members about $36 million in prescription drug costs this year.

Physicians, of course, are at the center of these cost-saving efforts, as benefit managers and insurers strive to "educate" them about the true costs of the drugs they are prescribing.

Many health plans that have launched pay-for-performance programs include a physician's generic prescribing rate as one of its components for a quality and cost-saving bonus. Others track a doctors' prescribing tendencies to try to nudge them toward generics in a peer-pressure style.

Jim King, MD, a family physician in Selmer, Tenn., said his six-physician practice receives regular report cards from health plans comparing the doctors' generic prescribing rate to their colleagues.

"It seems we're always prescribing more brand names than our peers," said Dr. King, who also is on the AAFP board. "There's been no threats, but they're just giving us the information."

For Dr. King and others, there are several other factors that go into choosing a medication. In some cases, the brand-name drug is deemed to be the most effective, he said. In other cases, patients simply prefer the more expensive medication, and for only a slightly higher co-pay, the brand name seems like a bargain.

But the co-pay tends to mask the true cost of medication for everyone, including physicians, said Steve Miller, MD, vice president of research for Express Scripts.

Some health plans might call for a $10 co-pay for generics compared with a $25 co-pay for brand-name drugs, but that $15 difference might not dissuade those patients and doctors who take those charges at face value. Choosing the generic, however, could save the employer that sponsors the health plan $60 on a single prescription, Dr. Miller said.

Taking an active role

But should that really be a doctor's concern? Yes, Dr. Miller said, especially considering the expensive state of health care today. If employers are facing charges that are too high, they might cut some of their employee benefits, which could compel the patients to stop seeing their doctor. Or, Medicare or a commercial health plan might decide that the trade-off for high prescription drug costs may be lower physician reimbursements, Dr. Miller said.

"If doctors don't take an active role in controlling prescription costs, they will be the victim of this instead of the driver," he said.

Sometimes, however, physicians really aren't offered much of a choice. Bennett Kaye, MD, a pediatrician with Children's Healthcare Associates, a seven-physician practice with offices in Chicago and Northbrook, Ill., said he finds it frustrating when he wants to prescribe what he considers to be the proper medication for a specific patient's specific problem, only to find it's not included in the relevant drug formulary.

"The insurance company will cover the generic with a $10 co-pay, but it won't cover the brand name at all," Dr. Kaye said. "My feeling is [the health plan] should pay the same amount and let the patients pay the difference. Some are willing to pay the premium."

Many other physicians might respond by handing out samples liberally, especially to patients who are struggling to make ends meet financially. While this may solve some short-term cost problems, it might be adding cost to the system in the long run, experts said.

If a patient starts to show improvement on a brand-name sample, he or she might refuse to try anything else, including a generic equivalent. And if your office doesn't have a large supply of that drug on hand, you may have to write a prescription for the brand name. When that happens, the pharmaceutical sales representatives have scored another marketing victory, Dr. Herrick said.

"If doctors realize that, they could give a free sample and a generic prescription," he said.

Some other companies are trying to combat those brand-name marketing techniques with generic and over-the-counter promotions. Resolution Health, a San Jose, Calif.-based health care data company that serves risk-bearing organizations, has instituted a program that encourages patients to switch to over-the-counter alternatives to some classes of prescription drugs.

The program, called "SMART-Switch," actually sends coupons to patients entitling them to free over-the-counter medication, and Resolution Health continues to send coupons to patients who use them.

"This can result in significant savings to payers, and with the rise in popularity of high-deductible health plans, there can be savings to the patient," said Alan Wright, MD, MPH, vice president of product strategy and business development for Resolution Health. "The physician needs to understand the differences in dosage for a branded drug vs. an over-the-counter drug."

With pressure coming from multiple sides, it's a wonder physicians' heads aren't spinning. But some don't seem to mind the extra time they spend, as long as it's for the patient's benefit.

"It does take more time with each patient, but that's kind of the way we're headed," Dr. King said. "I don't really see that as a bad thing."

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Patent losses

Some of the brand-name pharmaceutical drugs scheduled to lose their patents in the next two years and face competition from generics:

  • Zocor (simvastatin): Anti-cholesterol drug manufactured by Merck & Co. Scheduled to lose its patent in 2006.
  • Pravachol (pravastatin): Anti-cholesterol drug manufactured by Bristol-Myers Squibb Co. Scheduled to lose its patent in 2006.
  • Zoloft (sertraline hydrochloride): Depression and anxiety medication manufactured by Pfizer. Scheduled to lose its patent in 2006.
  • Norvasc (amlodipine besylate): Blood pressure medication manufactured by Pfizer. Scheduled to lose its patent in 2007.

Source: Express Scripts

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Generic fill rates by state, 2004

Express Scripts, which tracks generic fill rates across the continental United States, found a low of 41% (New Jersey) and a high of 56% (Oregon, Massachusetts and New Mexico) in 2004. The pharmacy benefit management firm estimated health care costs could have been reduced by $20 billion if more generics were prescribed. link

41% to
44.1% to
47.1% to
50.2% to
53.2% to
New Jersey, New York Florida, Georgia, Illinois, Indiana, Louisiana, Maryland, South Carolina, Texas Alabamas, Arkansas, Connecticut, Delaware, Kansas, Kentucky, Michigan, Mississippi, North Carolina, North Dakota, Nebraska, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Virginia, Wyoming Arizona, California, Colorado, Iowa, Idaho, Maine, Minnesota, Missouri, Montana, New Hampshire, Nevada, Rhode Island, Utah, Vermont, Washington, West Virginia Massachusetts, New Mexico, Oregon, Wisconsin

Source: Express Scripts

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