State Legislative Proposals Restricting Access To Generic Medicines Would Increase Costs $29 Billion Over 10 Years - New PCMA Research

Main Category: Public Health
Also Included In: Pharmacy / Pharmacist;  Medicare / Medicaid / SCHIP
Article Date: 05 Oct 2008 - 4:00 PDT

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Legislative proposals to exempt certain classes of drugs from generic substitution laws would increase costs by more than $29 billion over ten years if enacted nationally and provide no safety or clinical benefit for patients, according to a study conducted by the healthcare consulting firm Visante for the Pharmaceutical Care Management Association (PCMA).

"In this economy, the worst thing you can do is pursue policies which increase the cost of prescription drugs for payors and patients alike. The Food and Drug Administration, medical groups, and others maintain that generic substitution for all drug classes is safe and clinically appropriate," said PCMA President and CEO Mark Merritt. "So called 'generic carve-out' legislative proposals that would grant special protections to brand name drug manufacturers would have no clinical benefit for patients and would unnecessarily increase costs for consumers and payors by $29 billion in the coming decade."

Generic carve-out legislation would undermine the ability of pharmacists to substitute generic drugs in place of brand versions in certain drug classes. Many brand name drugs in these classes will soon face generic competition, according to Visante. Carve-out measures would protect these brands from competition by forcing pharmacists to contact prescribers for consent before substituting the generic, even when the prescriber has not indicated that a brand is medically necessary. This burdensome requirement runs counter to existing laws in all 50 states and could cause harmful delays for patients in need of their medications.

In 2008, more than 57 generic carve-out bills were introduced in 27 states. Forty-four of those bills have died thus far this year in 21 states. Based on a comprehensive literature review and an analysis of prescription claims data from four national pharmacy benefit managers (PBMs) managing benefits for some 165 million Americans, Visante finds:

-- Generic carve-out legislation runs counter to the opinion of the Food and Drug Administration (FDA), which has repeatedly stated that generic drugs can be expected to have the same clinical effects as their brand counterparts and encourages generic substitution across all therapeutic categories, including medications in the antiepileptic, immunosuppressant, and antipsychotic classes.

-- If generic carve-out legislation were enacted nationally in 2009 in the antiepileptic, immunosuppressant, and antipsychotic therapeutic classes, total prescription drug costs to Medicaid, commercial payors, and consumers would increase by $29 billion over the 2010-2019 period.

-- Nationally enacted carve-out legislation would increase drug costs to commercial payors by $17.5 billion, Medicaid by $6.2 billion, and consumers by $5.3 billion over ten years.

PBMs encourage generic drug utilization by implementing programs such as lower or waived copayments for generics, clinical step therapy protocols, as well as patient and prescriber outreach. Coupled with generic substitution laws, such programs have resulted in the typical generic substitution rate exceeding 90 percent. With generic carve-outs, new generic entries would capture only 25 percent of the market previously held entirely by their respective brand equivalents, according to Visante.

To be conservative, Visante only measured the impact of generic carve-out legislation on new generic drugs since it would be more difficult for new generics to gain market share in the face of prescriber consent requirements. Visante also suggests that carve-out legislation could impact the use of older generic drugs, since the vast majority of prescriptions for such products are still written by prescribers using the medication's brand name.

PCMA is the national association representing America's pharmacy benefit managers (PBMs), which administer prescription drug plans for more than 210 million Americans with health coverage provided through Fortune 500 employers, health insurance plans, labor unions, and Medicare Part D.

http://pcmanet.org