Since the state Legislature passed a law in 2009 to restrict the use of brand-name drugs in favor of generic drugs, generic drug use has increased in the Medicaid program from 68 percent to 82 percent.
It means the state stands to save as much as $56 million a year in pharmacy drug costs.
And there’s still room for more savings: For every percentage point generic drug use increases, the state’s $400 million Medicaid drug budget drops 0.5 percent to 1 percent.
Generic drugs are typically about 20 percent to 30 percent cheaper than brand-name drugs, and in some cases are up to 90 percent less expensive.
These are significant savings at a time when the state is turning state-funded programs upside down to shake out savings aimed at cutting into this year’s $2 billion budget shortfall.
Doctors and patients once reluctant to use generic drugs to combat chronic illness and disease are making the switch. The state’s Health Care Authority reports that 82 percent of the physicians active in the Medicaid program have increased their prescription of generic drugs.
More than half of the 780 health care providers surveyed now prescribe generic drugs more than 80 percent of the time. And nearly two-thirds have lowered the percentage of prescriptions written “Dispense as Written.” State law prohibits a pharmacist from substituting a less expensive generic drug for equally effective, but more costly brand-name drug requested in a dispense as written prescription.
The Generics First program was approved over the objection of the Pharmaceutical Research and Manufacturers of America.
It’s true that in some cases patients can’t tolerate certain drugs, regardless of whether it is generic or a brand-name variety.
But Generics First has done a good job of busting myths surrounding generic drugs, said Dr. Jeff Thompson, chief medical officer for the state’s Medicare program.
“Brand-name drugs and generic drugs are held to the same standard of manufacturing,” Thompson said. “All the literature has shown there is no difference.”
A study released in December, 2010 found that only Hawaii and Massachusetts topped Washington in the use of generic drugs in their Medicare program. At the time no state exceeded the 80 percent mark that Washington has surpassed since the last survey.
Meanwhile, a report released recently by the Federal Trade Commission suggests the pharmacy industry continues to engage in activity that keeps generic drugs from reaching the marketplace in a timely way.
Some, but not all, brand-name drug companies, pay or otherwise compensate generic drug companies to settle their patent challenges on certain drugs, which has the effect of delaying the introduction of lower-cost medicines for the consumer.
On average, the so-called pay-for-delay deals slow down the entry of the generic drug to the marketplace by an average of 17 months. There were a total of 28 potential pay-for-delay deals from Oct. 1, 2010, through Sept. 30, 2011, involving 25 brand-name pharmaceutical products with a combined annual sales of more than $9 billion in the United States.
The pay-for-delay deals are bad for the consumer and add to government costs for programs such as Medicare and Medicaid.
Putting a halt to these settlements that increase the cost of prescription drugs and keep less expensive generic drugs at bay should be a priority of Congress.
According to the Congressional Budget Office, legislation restricting pay-for-delay settlements could reduce the federal deficit by $2.67 billion over 10 years.
Furthermore, it would make state programs such as Generics First even more effective.
