CVS: Generics essential to reducing health costs

Health care is like precision engineering; tweaking one element ever so slightly can mean the difference between a healthy life and an early death or, in the case of drug spending, between nearly $50,000 and just north of $1,000.


That sums up a study published in last month’s issue of the journal Health Affairs. The study, conducted by CVS Caremark, Harvard University and Brigham and Women’s Hospital in Boston, found that the expansion of generic medications for treating and preventing chronic diseases could make the cost of preventive health care much lower than previously thought because earlier studies made projections based on the costs of branded drugs. The study was part of a three-year research collaboration between the three groups focused on understanding reasons for medication nonadherence and developing ways to improve it.


As recently as 2008, a study found that the cost of lowering “bad” LDL cholesterol was $83,327 per quality adjusted life year, or QALY, a financial measure based on the effect of improving the quality of life for patients with chronic diseases. But that number assumed patients were using branded drugs; when the numbers were recalculated for the same treatment using generic drugs, the cost went down to $17,084. When calculating the cost of glucose control, the 2008 number was $48,759 per QALY. Today, with generics, it stands at $1,022.


“No matter who holds the financial risk — the patient, employer or government health plan — using generic medications has to be a key part of managing treatment for chronically ill patients,” CVS Caremark EVP, chief medical officer and study author Troyen Brennan said. “This is a practical solution we need to focus on as we work to operate the healthcare system in a more cost-effective way.”


In response to the findings, the study’s authors made a number of policy recommendations, including amendments to state Medicaid statutes that require patient consent for substitution of generics; limitations on the use of such prescribing practices as dispense as written; ensuring electronic prescribing guidelines encourage use of cost-effective medications; developing programs to educate physicians and patients about the effectiveness of generics and dispel notions that generics are less effective than branded drugs; and developing incentive programs through pharmacy benefit managers and health plans that promote use of generics.