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Big Savings Available As Major Drugs Go Generic

$24.7 Billion in Generic Savings Available This Year

June 6, 2006

Express Scripts • Express Scripts Settles Drug Switching Charges For $9.3 Million • Big Savings Available As Major Drugs Go Generic • Company Stole Millions, NY charges • Pharmacy Benefit Managers Scrutinized --- • Consumer Complaints

Generic drugs could save U.S. consumers $24.7 billion this year alone, a report finds. The report examined the clinical potential for greater generic drug use in six major drug-therapy classes used to treat common conditions like stomach ulcers, inflammation, depression, high blood pressure and high cholesterol.

The report, issued by pharmacy benefit manager Express Scripts, was based on a random sample of approximately three million individuals projectable to the U.S. commercially insured population.

The $24.7 billion savings potential reflects the introduction this year of new generic drugs in two of the most widely-used classes -- the anti-cholesterol drug simvastatin (generic Zocor) and the anti-depressant drug sertraline (generic Zoloft). In 2005, Zocor and Zoloft had sales of $3.1 and $2.6 billion, respectively.

Thus, the biggest savings available this year are in the anti-cholesterol class at $10.3 billion. Generics, including lovastatin, pravastatin and ultimately simvastatin, are potent enough to fill 85 percent of all prescriptions for an anti-cholesterol drug, based on existing prescribing patterns.

On average, only 18.8 percent of anti-cholesterol prescriptions are currently filled with a generic. However, some health plans have already achieved generic utilization in the anti-cholesterol class exceeding 75 percent, according to published reports.

"We have a tremendous opportunity to conserve precious health care dollars by increasing our use of less expensive generic drugs and still achieve the same clinical benefit," said Dr. Ed Weisbart, Express Scripts chief medical officer.

The generic fill rate goals utilized in the report are based on an evaluation of clinical efficacy and market dynamics of branded and generic medications. In 2004 and 2005, failure to take advantage of the full potential of generic drugs in the six classes resulted in missed savings opportunities of $20 and $21.3 billion, respectively.

The Express Scripts report also ranked 2005 generic drug use and savings opportunities by state, revealing significant variations across the six drug categories.

Last year, California had the biggest absolute savings potential at $1.7 billion, but, on a per capita basis, Kentucky passed up the most savings at $163 per commercially insured life. New Mexico was best at capturing generic savings, leaving only $81 per capita unclaimed.

Using 2005 data as a guide, the states with the most to gain from greater use of generic anti-cholesterol drugs this year are Delaware, Michigan, West Virginia, Maryland, and Kentucky on a per capita basis. The leaders in absolute savings potential are California, Texas, Florida, Pennsylvania and Ohio.

In 2005, New Mexico and Massachusetts had the highest overall use of generic drugs at 60 and 59 percent, respectively, while New Jersey at 41 percent and New York at 43 percent had the lowest.

In addition to New Jersey and New York, four other states had generic fill rates of less than 50 percent: Florida, Louisiana, Maryland, and Texas. Neither Hawaii nor Alaska was included in the analysis.

The savings opportunity from increased use of generic drugs has never been greater. More than $50 billion worth of branded drugs will lose patent exclusivity over the next five years. This year alone, $14.3 billion in drug sales are expected to lose patent, with generic alternatives becoming available for at least 16 branded drugs.

A generic drug costs approximately 60 percent less than a brand name drug, on average. Consumers also pay a lower co-payment for generic medications, saving $15 or more per prescription on average compared to branded medications.

Weisbart outlined four steps consumers, health plans, health professionals and policymakers can take to increase the use of generic drugs:

• Increase awareness of the wide number of generic alternatives to brand drugs.

• Always assess if a generic drug would meet the clinical need; only consider using a brand drug when there is clear evidence that the brand drug provides an important clinical value not available with today’s generic medications. This strategy would free up resources to meet other pressing health care needs and help preserve the pharmacy benefit as we know it – without impacting quality.

• Adopt pharmacy benefit plan designs that encourage greater use of generic drugs and share the savings with patients. For example, use programs that provide for trying a generic drug before a brand. Express Scripts recently announced that 14 million members of pharmacy plans it manages are in such programs, a five-fold increase over 2.8 million in 2001.

• Enact state laws and regulations that support the use of chemically equivalent generic alternatives to brand drugs.

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