PCMA: Seniors, Medicare program could save at least $23 billion through 2010 with new generic drugs

WASHINGTON, April 18 /U.S. Newswire/ -- Seniors and the Medicare Part D program could potentially save, at a minimum, more than $23 billion dollars over the next five years as at least 14 major brand-name drugs commonly used by seniors are slated to become available in generic form, according to a new analysis released today by the Pharmaceutical Care Management Association (PCMA). However, PCMA also warned that these savings are at risk in the coming years as some special interest groups continue efforts aimed at undermining generic alternatives, both in public programs and the commercial marketplace.

"PBMs are America's lead drivers in the effort to increase generic utilization, which helps improve quality and lower drug costs for patients and payors," said PCMA President Mark Merritt. "Our analysis shows that in Medicare, increased access to generics has the potential to save, at a minimum, $23 billion dollars through 2010."

With great attention being given to drugs going off patent or losing exclusivity, PCMA examined the top 100 drugs used by seniors to arrive at a conservative estimate of potential Medicare cost-savings. Over the next five years, 14 brand-name drugs of the top 100 drugs commonly used by seniors to treat conditions such as high cholesterol, depression, heart disease, and hypertension are anticipated to go off patent or lose exclusivity. As soon as drugs become available in generic form, health plans and PBMs work collaboratively with patients, physicians, pharmacists, and payors to increase awareness about generic alternatives and potential cost-savings. Among the key findings of PCMA's analysis:

-- Seniors and the Medicare program stand potentially to save at least $23 billion dollars over the next five years as 14 major brand-name drugs commonly used by seniors are expected to become available in generic form. If PCMA's analysis were expanded beyond the top 100 drugs used by seniors, the savings would be even greater.

-- For the remainder of 2006, four drugs commonly used by seniors -- Zoloft (depression), Zocor (cholesterol), Pravachol (cholesterol), and Proscar (prostititis) -- are expected to go off patent or lose exclusivity and face generic competition. PCMA estimates the potential Medicare savings from using generic versions of these products at approximately $1.5 billion in 2006 and $13 billion over the entire 2006-2010 period.

-- In 2007, seven drugs commonly used by seniors - Norvasc (heart disease), Ambien (sleep disorder), Zyrtec (allergies), Lotrel (heart disease), Coreg (hypertension), Lamisil (fungal infection), and Tequin (antibiotic) -- are expected to go generic. PCMA estimates the potential savings in 2007 alone at nearly $700 million and about $7 billion over the 2007-2010 period.

PBMs Leading the Way in Encouraging Use of Generic Drugs

PBMs work collaboratively with patients, physicians, pharmacists, employers, and health plans to improve quality and lower costs, including through expanded use of generic drugs. CMS researchers recently cited increased use of generics as one of four key factors in driving the rate of growth in drug spend in 2004 to a ten-year historic low. PBMs are at the forefront of innovative efforts to encourage the use of generics, including:

-- Using tiered formularies that place generic medicines on the lowest cost tier, making them the most affordable option for seniors taking these medicines;

-- Educating patients on the affordability, safety and efficacy of generic medications in letters to patients and other direct outreach;

-- Generic drug physician-sampling programs to increase physician awareness of generic drugs;

-- Waiving co-pays and deductibles when generics are used instead of brands; and

-- Use of step therapy to ensure that, when clinically appropriate, generics are the first line therapy before more expensive brand medications are used - a principle used in other parts of the health system.

Special-Interest Efforts to Undermine Access to Generics

While the savings potential associated with increased access to generics for seniors and the Medicare Part D program are substantial, PCMA warns that these gains could be at risk if some special-interest groups - including the brand-name drugmakers' lobby - have their way. These groups are working hard to undermine increased access to generics, both in public programs and in the commercial marketplace, and their push could lead to higher premiums, copayments, and deductibles for beneficiaries. Their efforts include:

-- Opposing legislation, such as the bipartisan "Lower PRICED Drugs Act," sponsored by Senators Debbie Stabenow (D-Mich.) and Trent Lott (R-Miss.) that would speed up generics' market entry. The Stabenow-Lott bill has the support of a broad-based group of organizations, including AARP, Consumers Union, General Motors, and the Coalition for a Competitive Pharmaceutical Marketplace, which represents employers, insurers, and others;

-- Supporting mandated across-the-board preferred coverage of brand-name drugs in Medicare Part D, regardless of their effectiveness or the availability of clinically equivalent generics;

-- Supporting the use of legislation and litigation to extend patent protections on brand-name drugs scheduled to go off patent and prevent generics from coming to market as scheduled;

-- Opposing the use of comparative effectiveness measures to ensure value-based purchasing; and

-- Opposing generic substitution laws in state Medicaid programs.

In addition, recent news reports have indicated that the Food and Drug Administration's Office of Generic Drugs, which reviews applications for generic drugs, is facing a backlog of more than 800 applications.

A complete copy of the analysis can be found at http://www.pcmanet.org

PCMA is the national association representing America's pharmacy benefit managers (PBMs), which administer prescription drug plans for more than 200 million Americans with health coverage provided through small businesses, Fortune 500 employers, health insurers, labor unions, and Medicare Part D.