Generic drug rules could save Medicare $1.4B a year

Medicare could save $1.4 billion per year by pushing doctors to prescribe generic drugs, a new study published today in the Annals of Internal Medicine suggests.

Researchers compared generic versus name-brand drug use by elderly diabetics in 2008 under Medicare and the Department of Veterans Affairs, according to the study abstract. The results: Brand-name drugs use by Medicare patients was two to three times that of VA patients, whose  doctors must try generic drug therapies before prescribing brand-name drugs, Kaiser Health News reported.

The variances were most dramatic for use of insulin analogues, with Medicare brand-name use at 75 percent compared with 18 percent for the VA.

In addition to showing Medicare could have saved $1.4 billion by adopting the VA's prescribing practices, the study showed VA spending would have grown by $108 million under Medicare's prescribing rules, KHN reported. 

"You don't have to change a law or do anything special to decrease costs--you just have to change the kind of drugs people are using," study lead author Walid Gellad, M.D., an internist with the VA Pittsburgh Healthcare System and the University of Pittsburgh, told KHN.

He said the "only way to fix this" is to change physicians' habits. He noted the VA limits interactions between providers and pharmaceutical representatives, who sometimes offer perks when explaining to providers the benefits of their brand-name drugs.

Private insurers, meanwhile, are waging their own campaigns to persuade providers and patients to choose cheaper generic drugs. Their tactics include education campaigns for providers and members and co-pay differentials.

Brian Bullock, founder and CEO of The Burchfield Group, projected $40 billion in drug spending would shift from brand-name to generic drugs in the next three years. To encourage that migration, he recommends insurers implement step therapy programs, create generic-only therapeutic categories and exclude certain brand-name drugs that are product extensions, FierceHealthPayer previously reported.

For more:
- read the study abstract
- here's the KHN article