Increased use of generic drugs in Medicaid program saves state

HEALTH CARE: Savings expected to be at least $28 million a year

Staff writerOctober 25, 2011 

If the government is paying for your medicine, chances are you won’t recognize the pill’s name from a TV ad.

Doctors in Washington are prescribing brand-name drugs far less than the cheaper generic kind for poor patients whose care is paid for by the state and federal governments.

More than 4 out of 5 drugs prescribed in the state’s Medicaid fee-for-service program are now generic, the state says. It might be the highest rate in the country.

“There’s a myth out there that (generics) aren’t any good,” said Dr. Jeff Thompson, chief medical officer for the state’s Medicaid program. “Brand-name drugs and generic drugs are held to the same standard of manufacturing. … All the literature has shown there’s no difference.”

As state officials float ideas for draconian budget cuts to bridge a budget shortfall, they want to be able to show they’re also saving money in ways that don’t throw vulnerable people off of government services. This might help them make that case.

The state’s increase to a rate of 82 percent generic, up from 68 percent two years ago, is expected to save at least $28 million a year and perhaps twice that much.

State officials say it’s happening because they have given more information to doctors who heavily prescribe brand-name drugs – and the doctors have reacted by changing their practices.

The Legislature set new restrictions on the use of brand-name drugs in 2009, including their use by those heavy prescribers. State Medicaid officials, who asked for the changes, started sending frequent updates to doctors about how their usage compares to their peers.

They also showed doctors statistics showing that every time generic drugs’ share of spending ticks up by one percentage point, the state saves between half a percent and 1 percent of its annual $400 million Medicaid drug budget.

Four out of 5 of the targeted doctors have increased their prescribing of generic drugs since the Generics First initiative began. Thompson said that’s less because of the threat of restrictions and more because most doctors “want to do the right thing” and need a nudge in the right direction.

Sometimes patients want the brand name, while sometimes doctors wrongly think generics don’t work, Thompson said. And for a few patients with different genetic makeup, a specific drug may indeed work better, he said.

Rep. Tami Green, a Lakewood Democrat and nurse who backed the 2009 law, said the brand names benefit from drug companies’ advertising.

“I just came from the doctor, and there was a drug rep making an appointment to meet with the doctor,” Green said Monday. “They’re just right there, right in their face all the time.”

A spokesman for the Pharmaceutical Research and Manufacturers of America declined comment. But the group generally argues that allowing doctors to choose its companies’ drugs helps pay for the research that leads to medical breakthroughs.

The law was approved over PhRMA’s objections. The industry argued then that generic drugs could be ineffective and that drugs that don’t work could expose the state to legal risk that would wipe out savings.

A study commissioned by companies that manage prescription drug plans found that in December, Washington trailed only Hawaii and Massachusetts in use of generics in fee-for-service Medicaid. No state topped 80 percent, as Washington does now.

The rate still isn’t as high as it is for Medicaid patients enrolled in private managed-care plans, where generics make up 85 percent to 88 percent of prescriptions, Thompson said. About 60 percent of the state’s 1.2 million Medicaid patients are in those plans, in which the state pays a set per-patient fee.

The rest are under the fee-for-service system in which the state pays based on the kind of treatment. Even though they’re a minority, they account for two-thirds of Washington’s Medicaid drug spending, according to the drug plan study.

Jordan Schrader: 360-786-1826
Twitter: @Jordan_Schrader

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