Will e-prescribing encourage generic utilization? Experts believe so

April 14, 2008

This story addresses the issue of E-prescibing and generic utilization.

The Pharmaceutical Care Management Association recently sponsored a report that found that broad utilization of e-prescribing would result in a 4% annual decrease in drug expenditures by public and private payers. That translates into billions of dollars a year, and a good piece of that would be from increased substitution of generic drugs.

The report is part of an ongoing PCMA initiative, endorsed by the National Association of Chain Drug Stores and the National Community Pharmacists Association, to promote e-prescribing through federal and state legislative initiatives. It was conducted by the Gorman Health Group, a consulting organization in Washington, D.C.

"There is no doubt that e-prescribing reduces drug costs," said J. Lyle Bootman, Ph.D., dean of the College of Pharmacy at the University of Arizona, Tucson, and a leading proponent of the technology. "Technical and financial questions continue about implementation, but the value of e-prescribing in reducing cost is crystal clear. It is a technology that can pay for itself."

"We know it works and works well in reducing drug costs," agreed Steven C. Anderson, NACDS president. "The evidence that it increases generic substitution rates is there and growing all the time."

Bootman said that several studies in recent years examined exactly how much e-prescribing increases generic utilization. About three years ago in the Detroit area, for example, the three major automakers created the Southeastern Michigan ePrescribing Initiative. SEMI fully funded the cost of e-prescribing for the Henry Ford Medical Group. A study found that Henry Ford physicians generated more than two million electronic prescriptions since the project began, increasing generic utilization from 56.7% to 67.6%.

The SEMI experience is not unique. Here are some other examples:

The Massachusetts eRx Collaborative, sponsored by several New England health plans, found that electronic prescribers' pharmacy costs decreased 3.5% as a result of increased preferred formulary brands and generics in regional managed care markets.

A study by the national health plan Wellpoint found that generic prescribing rates by physicians using e-prescribing increased 3.7%, and the cost per prescription for those physicians fell 10.1%.

Medco Health Solutions found that physicians using e-prescribing increased generic substitution rates by more than 15%, and formulary compliance by 3.4% within the first six months of implementation. (The technology also led to an overall 42% reduction in the number of pharmacy calls to physicians' offices related to formulary compliance and a 30% reduction in calls related to prescription illegibility.)

Impact on generic use

Why does e-prescribing increase generic utilization? It's actually pretty simple, said Craig Morrow, M.D., SMA's medical director. "Electronic prescribing offers a direct path to physician compliance," he said. "Surveys indicate that the technology changes physicians' generic prescribing habits by putting formulary information directly into their hands at the point of care, providing automated alerts whenever generic alternatives are available."

"The single biggest reason is that physicians see their choices immediately," agreed Mark Merritt, PCMA president. "Information on comparable affordability is readily available to patient and doctor."