[Ip-health] Wall Street Journal: Employers, Insurers Push Generics Harder

[Thiru Balasubramaniam]

http://online.wsj.com/article_print/SB116225361845208328.html


  Employers, Insurers
  Push Generics Harder

As Many Blockbuster Drugs Go Off-Patent,
Some Health Plans Drop Copays for Copycats
By *VANESSA FUHRMANS*
October 31, 2006; Page D1

Wielding both carrots and sticks, a growing number of companies are
trying harder to push generic drugs on their employees.

At prices often 80% cheaper than those of brand-name medicines, generics
have become a key tool for health insurers and employers trying to hold
back soaring medical costs. There's hardly a health plan today that
doesn't use higher copayments on branded drugs as a way to nudge
employees toward less-expensive copycat versions.

But as employees re-enroll in benefit plans this fall, many will
encounter more-aggressive efforts to make generics the clear-cut choice.
Some companies, such as small employers insured by Blue Cross and Blue
Shield of Minnesota, have stopped charging any copayment or
out-of-pocket cost for generics. Others are taking a different tack,
adopting plans that cover only generics, such as a new, less-expensive
prescription-drug plan from *Medco Health Solutions* Inc., one of the
country's biggest pharmacy-benefit managers. And some employers are
trying to tee up savings by steering employees onto brand-name drugs
that will soon face generic competition.

The concerted push comes in part because the availability of generics is
fast reaching a critical mass -- and as health-care costs continue to
soar, employers and insurers are eager to take full advantage of the
generics' lower prices. Over the past 12 months, four of the biggest
blockbuster medicines -- the cholesterol drug Zocor, the antidepressant
Zoloft, the antibiotic Zithromax and the nasal spray Flonase -- have
gone generic. Patents for at least 11 more top-selling medicines are
expected to expire within the next two years. All told, nearly half of
the 60 most commonly prescribed drugs will become available generically
over the next four years, at prices that could save health plans and
consumers a potential $49 billion by 2010.

"In 20 years we've never had an opportunity like this, in terms of so
many generics available in such a broad number of therapeutic
categories," says John Malley, a senior pharmacy-benefits consultant
with employee-benefits group Watson Wyatt Worldwide. "Everyone's trying
to best position themselves."

Generic drugs are required to be the exact chemical equivalent of their
brand-name counterparts. They have the same effect in the body as
branded medicines, experts say. Many companies already have incentives
in place to encourage employees to use generic drugs. But these milder
measures have maxed out their savings potential.

Though 53% of prescriptions are filled with generics today, health-care
experts say billions of dollars in savings are left on the table each
year. For example, the antiheartburn pill Prilosec, once a
prescription-only best seller, is now available in inexpensive
over-the-counter and generic versions. But Nexium, a successor drug
that's nearly identical to Prilosec, still racked up U.S. sales of $4.3
billion last year for its maker, *AstraZeneca* PLC. That was almost a
15% increase from the year before. *UnitedHealth Group* Inc. recently
became the first health plan to stop coverage of Nexium altogether,
saying that there were plenty of less-expensive equivalents to choose from.

Many health-care consultants and insurers are now urging employers to
steer employees toward generics even when the brand-name drugs the
patients are taking don't have direct equivalents. Pharmaceutical makers
and some doctors argue that the strategy may force some people to take
medicines that don't work as well for them. But a number of studies
indicate that with many drug types, a majority of people get the same
health benefits when they switch to a generic from another brand-name
drug within the same group, even if it's not the direct brand-name
equivalent.