Bottom-line concerns driving generic incentive programs


Pharmacy benefit managers are pushing incentive programs.


Bottom-line concerns driving generic incentive programs

Under intense pressure to cut their rapidly rising prescription bills, pharmacy benefit managers and others involved in providing drug coverage are seeking relief in generic incentive programs. These programs have the potential to save millions of dollars for health benefit payers.

The generic promotion programs are gathering momentum at a time when a combination of costly new drugs and direct-to-consumer advertising are spurring double-digit hikes in the nation's medication costs.

"Payers are in absolute sticker shock about the cost of brand-name drug therapy," said Tim Covington, Pharm.D., director of the Managed Care Institute at Samford University's McWhorter School of Pharmacy.

To counter the trend, more and more payers and their PBMs are pushing mandatory generic substitution, step-care programs, and tiered co-pay plans. But they are also sweetening their efforts with discount deals that reduce or eliminate the co-pays for first-time users of generics. PBMs and insurers like Medco Health and WellPoint have used incentive programs to encourage consumers and physicians to switch to less costly but effective generic therapies.

One of the newest incentive programs was launched in July by Prime Therapeutics, the St. Paul-based PBM. Prime Therapeutics, which is owned by several Blue Cross Blue Shield groups or their parents, provides prescription benefit services for insurers, employers, unions, and third-party administrators across the country.

The new program is called Win with Generics. Initially, it is being offered to members of Blue Cross and Blue Shield of Kansas. The program has targeted more than 40 brand-name products ranging from Accutane to Ziac. Members receive a letter suggesting that they ask their physicians or pharmacists about switching to a generic. "Asking for a generic drug when you get your prescription drug may save you money through lower copayments or coinsurance," the letter says.

"This is one of a very large number of generic programs that we have," said Kyle Vance-Bryan, Pharm.D., Prime Therapeutics' chief pharmacy officer. "For a program like this to work, you would want to use as much automation and technology as possible, so you don't have to use paper trails, coupons, or things like that."

Vance-Bryan said programs in which a member receives a voucher in the physician's office and has to return it to the managed care company for redemption "tend to be fairly burdensome." He said Prime Therapeutics had a program like that, which gave vouchers to physicians who were encouraged to pass them on to patients. "In the end, we were not successful in getting a large utilization of the vouchers," he said. "But we got enough of the vouchers used and enough learning from it that it was an extremely beneficial pilot. You learn from your mistakes."

The new program works differently, Vance-Bryan said. It mails out a packet of information to members telling them that if their prescribed brand-name drugs are among those targeted, they stand to get their co-pays waived at the pharmacy counter as long as their physicians agree with the switch. Part of the packet contains a sheet listing the targeted drugs and describing the six steps (see illustrations) in getting the discount .

Vance-Bryan said waiving the co-pays automatically at the point of sale also provided a timesaving benefit to pharmacies. "By having an electronic load ahead of time, so it's all done electronically, you make it user-friendly and easy for the pharmacist. Any pharmacy can tap into that, assuming it's on network, so there are all kinds of opportunities there, aside from just the ingredient-cost component of it," he said.

"The chains are very interested in participating in this program," Vance-Bryan said. "We assume that's because it's very user-friendly and doesn't take time away. Generally, the pharmacies are very interested in driving generics because they do make a profit margin there and this helps them facilitate that."

Vance-Bryan also pointed out that "these programs in no way diminish the quality of care. They save money on generics, and the money saved by the third-party payer is dumped back into disease management efforts. Everybody wins."

Premera Blue Cross in the Northwest has taken a different approach. Premera is part of a group of healthcare benefit providers based in Mountlake Terrace, Wash., with members in Alaska, Oregon, and Washington.

Premera has launched a public education campaign called Generics—Yes! Through educational brochures distributed by Premera's clients and through print and radio ads, the insurer is hoping to increase generic drug use among the 1.4 million members covered by its plans. Premera also devotes a portion of its Web site (www.premera. com) to promoting generic use. A calculator allows anyone entering the name of a branded drug to find out the cost savings available with a generic equivalent.

A recent Premera analysis of prescribing habits showed that most Washington State physicians are already sold on the value of generics. In a press release, the insurer claimed that Washington physicians chose generics 93.1% of the time when available, saving members "upwards of $70 million in out-of-pocket costs in 2002."

Dana Hurley, Pharm.D., director of the Generics—Yes! campaign, said Premera had also engaged pharmacies in its network to become part of the generic dispensing program. The pharmacies were chosen based on volume and generic dispensing rate. They included chains like Rite Aid, Walgreens, Bartell's, and Safeway as well as some high-volume independents. The pharmacies receive quarterly reports describing their generic dispensing patterns.

The value to the pharmacies, according to Hurley, is that the reports give them "some idea of how they are doing compared with their peers and what their additional profit level could be. And they see it as an opportunity to do further education with their individual stores." To take part, an individual pharmacy or chain has to have a generic dispensing rate less than 47%.

In a follow-up e-mail message, Hurley said, "We chose that cutoff in order for the pharmacies to be able to have a measurable chance for increasing their rates and their profits." Premera's PBM partner is Medco Health. Hurley said Premera had also participated in Medco Health's Generics First, the three-year-old physician sampling and education program that has reported success in changing prescribing patterns.

Chris Robbins, principal of the prescription benefit consulting firm Arxcel, is involved in another aspect of the generic-push equation: advising clients on benefit designs that will result in greater use of less costly generic drugs.

Robbins said that while the interest in substituting generics for brands isn't new, the incentive to do so has intensified as the cost of new drugs has continued to escalate. "It's getting a lot more play now, because when you look at a drug like Prilosec or Prozac and the percentage of your drug spend on those drugs, it's more important to ask, How do we maximize that use of generics whenever possible?" he said.

With drug prices going up at 16% to 18% annually, Robbins noted, "it doesn't take long to double your drug costs. So [employers] are looking for tools" to reduce them. "I think the public is becoming a little more accepting of generics," he added. "Generic toilet paper doesn't work as good, but generic drugs are every bit as safe."

The push for generic substitution isn't new for HMOs, Robbins said. "For at least the past four to five years, HMOs have been looking at mandatory generic substitution or step-care protocols," in which a generic is tried first if available. Employers, he said, have not been as aggressive. But now, he added, "we're seeing many more of the self-funded, carved-out employer plans" using mandatory substitution or step-care protocols to get generics prescribed as first-line treatment.

Benefit plans in some states require that a generic be substituted even if a physician checks DAW (dispense as written), or the member pays the additional cost for the brand, he said. "Employers went to mandating generic substitution fairly easily, but they've been resistant to some of the step-care protocols or therapeutic interchange programs" in which a generic like fluoxetine is substituted not only for Prozac but also for other brands within the antidepressant class.

"When you have a mandatory generic substitution program, that usually just hits drug for drug or molecule for molecule," Robbins said. "But if you're not doing the therapeutic class interchange, you're losing a lot of opportunities to increase that generic substitution percentage." He added that there were "some clinical issues with switching people who have already started on a drug, especially with the antidepressants." But, he said, it was "very important to see if you can start with a generic."

A lot of his clients, Robbins said, are implementing step-care protocols, which mandate starting with a generic before any brand drug can be tried. For example, he said, "you would have to start with a generic version of Prozac before you get any other SSRI, or with omeprazole before you can get any other proton pump inhibitor."

Robbins said that physicians also need to be targeted because nobody is promoting generics to the same degree that drug manufacturers push their brands. "I think physicians need to be educated on the cost ramifications and significance of the price range between the brand-name drug and a generic," he said.

Bruce Buckley

The AUTHOR is a New York-based pharmacy journalist.


Bruce Buckley. Bottom-line concerns driving generic incentive programs. Drug Topics Generic Supplement;147:18s.

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