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Study: No Need To Burden Consumers To Cut Drug Bill

MANAGED CARE March 2006. © MediMedia USA
News and Commentary

Study: No Need To Burden Consumers To Cut Drug Bill

MANAGED CARE March 2006. ©MediMedia USA

Some potentially good news for consumers, and perhaps the health plans working to keep consumers and employers happy. A study by Express Scripts shows that changing the prescription benefit copayments can reduce costs by encouraging more use of generic drugs. All without shifting costs to consumers.

Jake Cedergreen, the director of benefit design and modeling at Express Scripts, says that the study, based on an analysis of 2004 prescription drug claims, indicates that "a pharmacy plan design that increases the differential between brand and generic copayments by $10 can expect to achieve a 3 to 4 percentage point increase in the generic fill rate, which can translate into a 3 to 4 percentage point reduction in drug costs."

According to Express Scripts, the study shows that the difference between a plan's copayment for generic drugs and the copayment for brand drugs is a crucial element in increasing the use of generic drugs. In other words, and perhaps not surprisingly, when generic copayments are slightly reduced and brand copayments are increased by the same amount, the average health pharmacy plan can cut costs while maintaining what it calls "member fair share."

The company says that member fair share "ensures that members pay an equal or lower percentage of the drug cost when a low-cost prescription alternative is selected and can be used to evaluate the effectiveness of a plan's copay differential." According to Express Scripts, this all adds up to "an appropriate brand/generic differential — without increasing the overall cost to members."

Says Cedergreen: "Given the significant generic opportunity in front of us, the research points to copay differentials as a key driver for increasing generic fill rates." He adds that "this is another example of how benefit design can effectively reduce drug costs by aligning the interests of the member and the plan sponsor around the low-cost prescription alternative."

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