By Scott Scanlon – Refresh Editor
Two pharmacists who talk about the benefits of generic prescription medication make it clear in today’s WNY Refresh cover story that patients can benefit from these drugs because they are made to the same standards as brand names but tend to cost a lot less.
But what about insurance companies? How do they benefit? And if they’re reaping the savings of covering less expensive generics, how come the cost of health insurance premiums never seem to go down?
These are questions I put this week to Mona Chitre, vice president of pharmacy management for Univera Healthcare and a faculty member at the St. John Fisher Wegmans School of Pharmacy, who counts University at Buffalo Pharmacy School students among her charges.
The short answer is that a greater number of generics don’t drive down the cost of health premiums because insurers tend to drive their savings into offering more specialized drugs to chronically ill patients.
Chitre explained that patents are set to expire on 37 drugs this year and next, which allows generic drug makers who didn’t have to pay for research, development and advertising to use the same formulas to make less expensive copies.
Here’s our exchange involving what happens in the months before a patent expires, and why insurance rates don’t tend to fall when more generics enter the market:
Do brand names generally come down in price when generics enter the market?
Not always, no. Usually what we see, actually, is that right before the drug goes off patent, six months to a year before they go generic, we see tremendous price increases in the branded drug because the manufacturer is trying to maximize their profit.
One or two rare instances, we’ll see the Lipitor, the Nexium try to compete with the generics to keep the market share, but in general the brand remains the same and the generics come in and take the market.
How does this transformation to generics help insurers? What does it mean to insurers and does some of that savings get passed along to customers?
Absolutely. All of us have been able to save money for the upstate New York market. We now have about an 82 percent generic fill rate across our market. This way, patients have access to medications that are affordable, we’re able to manage our premiums with that generic savings and employers can maintain coverage. There’s so much trickle that it’s really a win-win-win with every segment of the health care system.
And because there are so many drugs on the market now, and so many coming in, we might be talking about making a dent in some health insurance premiums over the next little while?
Well, here’s the interesting market dynamic. We’ve been able to really maximize generics. We have a few more years of some blockbusters entering the market. We have Nexium and Cymbalta and Celebrex entering over the next few years, but what we’re balancing against is specialty drugs.
If you think of drugs for rheumatoid arthritis, hepatitis C, for cancer, for MS, they are actually really impacting the pharmacy trend, and thus we need to maximize generics so we can offset these high-cost new therapies, what we call ‘biologics,’ and keep them affordable and ensure that our patients have access to those.