Generic utilization: The sky's the limit

August 6, 2007

This article examines generic dispensing rates and reveals which organizations have the highest dispensing rates.

More Americans are cutting their prescription drug costs by switching to generic medications, according to the latest data released by the Centers for Medicare & Medicaid Services. New data collected and analyzed by CMS indicate that generic use is especially high among those in the new Medicare drug benefit program.

CMS also reported that the average organizations offering both PDP and MA-PDP plan options reported higher GDRs for their MA-PDP plan offerings with formularies identical to their PDP formularies. The GDRs for MA-PDPs were a little higher at 66.5%, while the average PDP distributed generic drugs at a rate of 57.5%, suggesting that MA-PDPs are more tightly managing their formularies, according to some industry observers.

What's fueling higher GDRs

The higher GDR in Part D is largely attributed to differences in the tier placement, cost-sharing, and utilization management tools applied by plans, according to an analysis report of the CMS findings released by the consulting group Avalere Health, Washington, D.C. "We suspected that GDRs would be higher in Part D relative to the commercial market, and we are seeing that trend," noted Valerie Barton, VP and director of Data Analytics Practice for Avalere.

"What is also interesting are the differences between the way the MA-PDP plans are functioning and the way the PDPs are functioning," continued Barton. For example, these findings suggest that MA-PDPs have some leverage over physician behavior and are therefore able to drive beneficiaries to generics more effectively than PDPs. How? Because MA-PDPs have the "ability, via physician networks, to create incentives for physicians to dispense generics," she explained.

According to Barton, the marketplace has been very interested to see how these companies were going to manage the benefit, because "it's not like MA or a managed care benefit where we can see across the whole patient and look at the medical side and drug side and juggle between the two. So, we're seeing lower GDRs for PDPs than MA-PDPs because there are fewer tools at the PDPs' disposal to be able to manage and channel drug use into generics."