Copayment Changes Boost Generic Drug Use, Reduce Healthcare Costs

Strategic Insights -

A study by Express Scripts reveals that increasing the differential between brand and generic copayments can lead to a 3 to 4 percentage point increase in generic fill rates, resulting in a 3 to 4% savings in drug costs. The study analyzed 2004 prescription claims and found that reducing generic copayments and increasing brand copayments can achieve "member fair share" and an appropriate brand/generic differential without increasing the overall cost to members.

Key Takeaways:

  • A pharmacy benefit plan design that increases the differential between brand and generic copayments by $10 can expect to achieve a 3 to 4 percentage point increase in the generic fill rate.
  • The study found that the difference between a plan's generic copay and brand copay is a key driver in increasing the use of generic drugs.
  • Reducing generic copayments and increasing brand copayments by the same amount can achieve "member fair share" and an appropriate brand/generic differential without increasing the overall cost to members.
  • Member fair share ensures that members pay an equal or lower percentage of the drug cost when a low-cost prescription alternative is selected and can be used to evaluate the effectiveness of a plan's copay differential.
  • Over the next 5 years, more than $50 billion worth of branded drugs will lose patent exclusivity, with $11 billion in drug sales expected to lose patent in the next year alone.
  • Generic alternatives will become available for at least 15 branded drugs in the next year, with Zocor, a cholesterol-reducing blockbuster, being the largest-selling drug to lose exclusivity in 2006.

Statistics:

  • 3-4% increase in generic fill rate for every $10 increase in differential between brand and generic copayments
  • 3-4% savings in drug costs with increased generic fill rates
  • $50 billion in branded drugs to lose patent exclusivity over the next 5 years
  • $11 billion in drug sales expected to lose patent in the next year
  • 15 branded drugs to have generic alternatives available in the next year

Sources:

  • Express Scripts study, referenced in Health & Medicine Week
  • Health & Medicine Week editors
  • NewsRx.com
  • Express Scripts website at www.express-scripts.com/ourcompany/news/outcomesresearch/onlinepublications/