West Virginia health care consumers and insurers collectively saved $2.4 billion in 2014 by choosing generic drugs over their brand-name counterparts, according to a study released this week by the Generic Pharmaceutical Association.
According to the report, the U.S. health care system saved $254 billion last year, and $1.68 trillion in the last decade, by choosing generics over brand names. Those savings have increased year over year since 2005, and the cost of brand-name drugs have risen even as more generic alternatives enter the market, said Tim Speerhas, the director of pharmacy strategy and partnerships for Highmark West Virginia, the state's largest insurer.
"Generics are much less expensive than brand drugs; that's been the norm for years. What's changing recently is that there are more and more generic drugs coming onto the market," Speerhas said. "If you're talking about an overall savings, it's because there are a lot more generics on the market, and if you're talking about the difference in cost, it's because brand-name costs are increasing steadily."
Generic drugs account for 88 percent of all prescriptions dispensed in the U.S., but only 28 percent of the total drug cost, according to the report. The greatest Medicaid savings were realized by Kentucky, West Virginia, Maine, Rhode Island and Massachusetts.
In West Virginia, the Medicaid program saw $525 million in savings. Vicki Cunningham, director of pharmacy services for the West Virginia Bureau for Medical Services, said the state's Medicaid program chooses the most inexpensive drugs for its preferred drug list - most often the generic, although the federal rebates offered for some brand-name drugs make them the cheapest choice.
"If there is a generic version for a brand that is prescribed, [our system] will defer to the generic prescription to be used instead of the brand," Cunningham said. "We also have 'maximum allowable cost' program, so that when there are three generics available, and we can develop a reasonable maximum allowable cost, and we put a max on the brand and the generic so that it ensures that pharmacists use the generic instead of the brand."
Speerhas said Highmark tries to develop the most clinically sound drug formulary possible, and still offers some brand name drugs alongside their comparable generic counterparts. There are some brand names, especially specialty drugs, that have no generic equivalent, and others that are chosen by consumers or doctors despite their higher out-of-pocket cost - a cost that often rises as a brand name reaches the end of its patent period, Speerhas said.
"In some cases, there's one brand name remaining in a drug class, and that last brand name is trying to make as much money as they can before they lose their patent," he said. "Some people just want a brand-name drug. It's not really needed clinically, but they want a brand-name drug - you still have that mentality out there."
West Virginia's commercial insurance system saved $1 billion in 2014, and its Medicare savings were nearly $740 million. The savings for those who were uninsured or paid cash for their prescriptions totaled $97 million. For more information or to access the full report, visit www.gphaonline.org.
Reach Lydia Nuzum at lydia.nuzum@wvgazettemail.com, 304-348-5189 or follow @lydianuzum on Twitter.