Insurers lean toward generic alternatives

Insurers have traditionally focused their attention on savings through therapeutic equivalents, which contain the same active ingredients, strength, and dosage form as the original brand-name drug. But, according to an article published in the British Journal of Generic Medicines titled “Maximising Generic Utilization: The Power of Pharmacy Benefit Management,” more insurers are focusing their attention on a second approach to generic drug management — generic alternatives, which contain different active ingredients, but have comparable efficacy to brand-name drugs in the same class. For example, some plans may encourage the use of generic omeprazole as a therapeutic alternative to patent-protected brands in the proton pump inhibitor class.

In 2006, brand-name drugs accounted for about 42 percent of total dispensing volume, according to Medco Health Solutions. About 9 percent of the current dispensing volume could be converted to therapeutic equivalents over the next three years. An additional 11 percent to 16 percent of current dispensing could be converted to generics because new generics expand the range of treatment options. High-priced brands are the best candidates to switch because the large cost differentials are an incentive for payers and members to change therapy.

Source: Snow, DB. 2007. J Generic Medicines. 5:27–38.

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