CVS Caremark study: Less-restrictive generic laws could curb state Medicaid costs

WOONSOCKET, R.I. Changing generic substitution laws in favor of less-restrictive regulations could save states struggling to pay for increasing healthcare costs through their Medicaid programs more than $100 million over the next several years, according to a new CVS Caremark study.

The study, published in the July edition of Health Affairs, looked at the generic substitution of simvastatin for cholesterol brand drug Zocor over six quarters beginning June 23, 2006, when Zocor's patent expired. The study examined how quickly Medicaid recipients moved to the generic equivalent medications under three different state statutes -- mandatory versus permissive substitution, with and without prior authorization, and with and without requiring patient approval for substitution. The generic substitutions discussed in the study are for chemically identical generics for brand name drugs.

The study involved a review of Medicaid claims data between June 2006 and 2008 in 48 states and the District of Columbia.

"Requiring patients to provide consent prior to generic substitution led to an approximately 25% reduction in generic substitution," stated Dr. William H. Shrank, the study's lead author, an assistant professor of medicine at Harvard Medical School in the division of pharmacoepidemiology at Brigham and Women's Hospital in Boston. During the six consecutive quarters reviewed, the study determined that states could have saved almost $20 million if the substitution from Zocor to the chemically-identical simvastatin were made more quickly for that one medication.

"This study has important implications. We determined states can stem the rising cost of medications paid for by Medicaid programs by modifying statutes to make it easier to replace brand name medication with generics," stated Troyen Brennen, EVP and chief medical officer of CVS Caremark. "There are many brand medications that will lose their patent protection over the next several years and, as a consequence, we will see the introduction of generic equivalents for these brand medications. In particular, we can expect significant activity with the upcoming patent expirations of Lipitor, Plavix and Zyprexa over the next 18 months."

In fact, the study found that state Medicaid programs could save more than $100 million on those three medications -- Lipitor, Plavix and Zyprexa -- alone by adopting regulations that allow pharmacists to make a change following the patent expiration, without requiring direct patient approval.