More lenient state laws governing generic drug substitutions could result in savings in excess of $100 million, according to a recent study.
States struggling to pay for increasing healthcare costs through their Medicaid programs could see those savings over the next several years by permitting easier and faster substitutions of generics for brand medications, a recent CVS Caremark study shows.
The study looked at how quickly Medicaid recipients moved to generic equivalent medications under three different state statutes – mandatory versus permissive substitution, with and without prior authorization, and with and without requiring patient approval for substitution.
"Requiring patients to provide consent prior to generic substitution led to an approximately 25 percent reduction in generic substitution," said William H. Shrank, the study's lead author, an assistant professor of medicine at Harvard Medical School in the Division of Pharmacoepidemiology at Brigham and Women's Hospital in Boston.
For example, during six consecutive quarters reviewed, the study determined that states could have saved almost $20 million if the cholesterol drug Zocor were replaced by the chemically-identical simvatstatin more quickly.
"This study has important implications. We determined states can stem the rising cost of medications paid for by Medicaid programs by modifying statutes to make it easier to replace brand name medications with generics," said Troyen A. Brennen, MD, executive vice president and CMO of CVS Caremark. "There are many brand medications that will lose their patent protection over the next several years and, as a consequence, we will see the introduction of generic equivalents for these brand medications.”
It is expected that the United States will see significant activity with the patent expirations of Lipitor, Plavix and Zyprexa over the next 18 months.
"The study estimates state Medicaid programs can save more than $100 million on those three drugs alone by adopting regulations that allow pharmacists to make a change following the patent expiration, without requiring direct patient approval,” Brennen said.
Brennan said cost containment and better management of increasing healthcare costs are important in the face of the economic climate and expected expansion of state Medicaid programs resulting from federal healthcare reform.
The study, published in Health Affairs, is a collaboration between CVS Caremark, Harvard University and Brigham and Women's Hospital. Using Medicaid claims data from 2006-2008, the study's purpose was to research pharmacy claims data to better understand patient behavior around medication adherence and appropriate medication use. Patient non-adherence to essential chronic medications is widely recognized as a barrier to improving public health and a cause of increasing medical costs.