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Blues and generic drugs
Brand-name drugs are under siege in several states as health plans crack down on prescription spending and encourage pharmacists to dispense more generic drugs. With the help of marketing campaigns and prior-authorization programs, health plans are witnessing a surge in generic drug usage with the potential to save millions of dollars.
A wide variety of generics have been around for decades, but health insurers are under increasing pressure to cut costs as prescription expenditures continue to soar from about $154.5 billion in 2001 to a projected $222 billion by 2004. For health plans, the solution is to encourage doctors, pharmacists, and consumers to use lower-priced generics.
The timing is ripe for generic substitution. Several blockbuster drugs like Prozac (fluoxetine, Eli Lilly) now have generic copies on the market. About 17 drugs, accounting for more than $35 billion in annual sales, will lose their patents over the next three years. These include such popular drugs as Claritin (loratadine, Schering-Plough) and Cipro (ciprofloxacin, Bayer).
Several organizationsthe Generic Pharmaceutical Association (GPhA), for oneare pushing the generic drug agenda. But among health insurers, Blue Cross Blue Shield of Michigan (BCBSM) is leading the charge. After a statewide advertising campaign, the plan experienced a sharp increase in generics, with potential savings of $30 million a year. It has continued to build momentum ever since. Of the members who converted to generics, more than 96% have remained with them, according to the company.
The multifaceted campaign began in June 2001 with coupons to encourage consumers to try generic versions of 25 leading brand-name drugs. But before the campaign was launched, the health plan had to take drastic measures to reduce drug costs, explained Glen Perry, director of pharmacy services administration, BCBSM. "Since the advent of direct-to-consumer advertising, we saw our generic dispensing rate slide south and our pharmacy expenditures continue to grow."
BCBSM launched a contest for pharmacists to see which pharmacy could dispense the most generics during a three-month period. Nearly 1,100 pharmacists participated in the contest. Kevin White, R.Ph., owner of Grand Value in Detroit, was the top winner among the state's independent pharmacies. Grand Value increased its generic substitution rate by 48%. The pharmacy has a high percentage of patients with diabetes, so many patients were converted to generic insulin needles. "We also looked at drugs we weren't giving out generically. We started flagging our computers with all drugs that had generics. In some cases we didn't even realize they had generics, like the debridement ointment Accuzyme," said White.
The campaign's most visible elements were advertisements using the slogan "Generics: The Unadvertised Brands." The Blues plan dedicated more than $1 million, or 20% of its total $5 million advertising budget, toward the project. The company skipped television advertisements but ran print ads in community newspapers, such as the Detroit Free Press, that featured the contest winners: Kevin White, R.Ph., and Sara Fakhoury, R.Ph., who represented Rite Aid as the winning chain store. The campaign also plastered billboards with the message "Generic Drugs: Safe, Effective, FDA Approved." In an unprecedented move, the Food & Drug Administration granted permission for its logo to appear on the outdoor advertising.
Thanks to the advertisements, consumer awareness about generics has risen to its highest level in the state, according to Nordhaus Research, which conducted a survey for the Michigan Blues plan. In July, 64% of Michigan consumers surveyed (up from 58% the year before) were aware that generic drugs have the same effect as advertised brands. Addition-ally, 80% of those polled said that they would look with favor on a health plan that promoted generic drugs.
The Blues plan has reversed course on pharmaceutical expenses. The generic dispensing rate has grown nearly two percentage pointssurpassing the health plan's original goal of a 1% increase. Perry estimates that if generic dispensing continues at this rate or improves, the company will save about $30 million by March 2003.
The groundbreaking campaign, not to mention the million dollar cost savings, has generated national attention and prompted other health insurers to take notice. Interest grew to the point where officials at Blue Cross Blue Shield of Michigan organized a conference in September. About 125 people attended the one-day meeting, representing about 50 health insurers, several Fortune 500 companies, and government agencies. Their collective goal: Curb pharmaceutical expenditures by adopting innovative generic-substitution programs.
The Michigan insurer is not the only health plan promoting generics. During the conference, other insurers presented their unique generic-usage programs. The Blues plan in upstate New York launched a campaign in September of this year, called "Go Generic ... The Smart Choice." The campaign is targeting consumers, through educational literature and community seminars, to raise public awareness about generics.
The Virginia Blue Cross and Blue Shield plan, known as Trigon Blue Cross Blue Shield, provides health benefits to nearly two million members. It launched a prior-authorization project targeting the heavily promoted COX-2 inhibitors that have been found to relieve pain and reduce the risk of serious gastrointestinal side effects such as ulcers and bleeding. Trigon, which presented its program during the conference, singled out the COX-2s because they are deemed as "low-value" drugs at a "high-value" price. A year's supply of Celebrex (celecoxib, Pharmacia), for instance, is about $732, while generic naproxen costs $48 a year. "We reserve COX-2s for high-risk patients," commented Ronald Lyon, R.Ph., v.p. of Trigon's pharmacy services, "because most patients with arthritis can be treated just as well with lower-cost generic versions of older NSAIDs."
Under the prior-authorization program, doctors must get Trigon's permission to pay for a prescrip- tion of a COX-2, like Celebrex or Vioxx (rofecoxib, Merck). The prior- authorization form states that the "incidence of deaths and clinically significant side effects" for Celebrex and Vioxx is similar to that for older anti-inflammatory drugs.
Trigon adopted a rating system that evaluates a patient's age and medical history to determine whether a specific drug is the right one for that patient. An independent panel of doctors and pharmacists has graded about 2,000 commonly dispensed drugs. For example, the panel gave Celebrex and Vioxx a D rating, and naproxen received an A rating.
While the health plans have won heaps of praise from most pharmacy groups for their innovation, the Michigan Blues plan has lost the support of one of its earliest alliesthe Michigan Pharmacists Association (MPA).
Originally, MPA endorsed the Blues campaign, permitting its logo to appear in newspaper advertisements. But the 119-year-old organization recently withdrew participation in the program when the Blues plan announced in September that it was reducing pharmacists' dispensing fees by 50 centsa reduction of 20% on average. The fee cut is being implemented to trim the health plan's pharmacy budget by 1%, or $16.5 million in yearly savings. The fee cut affects pharmacists who participate in the plan's Preferred Rx Program.
"We support the concept behind the campaign, but now we need to distance ourselves from Blue Cross Blue Shield of Michigan," said Dianne Miller, associate executive director of the Lansing-based group that represents 3,633 pharmacists. "We feel that it would be inappropriate to allow Blue Cross Blue Shield of Michigan to use MPA's influence and reputation while it is saving money for its organization and simultaneously reducing pharmacists' reimbursement."
Kevin White, the pharmacist who won the contest, was not surprised by the cut in reimbursement, acknowledging that most health plans are trimming fees. "The only way to make money is to dispense generics; then you get a financial incentive." But even White finds the timing a bit ironic. "On the one hand, they are promoting generics and, on the other hand, they are cutting our throats."
Paul Wynn. Health plans using new tricks to drive generic usage. Drug Topics 2002;25:14s.