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Use of generic drugs by faculty, staff, retirees and dependents in the U-M drug plan has increased from 43 percent to 65 percent since January 2003 when the University’s prescription drug plan was implemented. This increase in generic use has reduced the projected drug cost increase for the University by millions of dollars and sustained lower co-pays for drug plan members, U-M officials say.
“More than 860,000 prescriptions have been filled each year since 2003 for the 82,000 faculty, staff, retirees and dependents in our plan,” says Laurita Thomas, associate vice president for human resources. “In a community of that size, the cost savings for the University and the plan members can be very impressive with even modest behavioral changes.”
Thomas sees individual health decisions as an important factor in curbing costs in the future.
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“The use of generic drugs at much lower cost than their brand-name counterparts has saved millions of dollars, and other individual decisions like participating in health screenings, disease management programs and preventive care can have a similar effect — improving individual health while curbing the total costs of care for our community.”
In 2007 the University and plan members spent a total of $74 million on prescription drugs under the U-M plan, which is an increase of just under 3 percent over the 2006 total cost but far below the national projected increase of close to 12 percent. The plan member cost share for prescription drugs was about 16.5 percent compared to the national co-pay average member share of 27 percent.
Keith Bruhnsen, manager of the U-M prescription drug plan, says the reduced rate of increase is the result of U-M plan management, members’ growing awareness of generic medications, coordinated efforts with prescribers to utilize generic alternatives, and members becoming better consumers by seeking the best value medications.
“Drug plan members and providers have responded to selecting lower-cost generic medications when they become available,” Bruhnsen says. “The U-M generic dispensing rate is comparable to the rates of the best employers and health plans in the United States.”
Generic drugs are approved by the U.S. Food and Drug Administration (FDA), contain the same active ingredients and come in the same dosage forms as the brand-name medications, and must meet the same safety, production and performance standards. “Generic drugs are a safe and effective alternative to brand-name medications, and they cost 50 percent less on average than their brand-name counterparts,” says Dawn Parsons, clinical pharmacist in the Benefits Office.
U-M Programs Help Maximize Savings
Three recently implemented programs help more drug plan members save out-of-pocket expenses and move to generic alternatives — a pill-splitting program, a statin medication program and a proton pump inhibitor (PPI) medication program.
Pill Splitting
In the voluntary pill-splitting program launched Jan. 1, 2006, participants cut larger doses of certain cholesterol-lowering medications into two smaller doses as prescribed by their health care providers. Drug companies charge the same amount for a 30-day supply of drugs whether the dosage is 24, 40 or 80 milligrams, so by splitting a larger dosage pill the participant saves 50 percent on his or her co-pay and the University saves money on the cost of the drugs. In 2006 the pill-splitting program saved the University $195,000 and members saved $25,000 in out-of-pocket costs. In 2007 the savings for members grew to more than $34,000 while the University savings was $151,000.
Statin Medication
The statin medication program was the result of generic market entries in 2006 for cholesterol-lowering medications like Zocor and Pravacol. Members using generic statins save money with a lower co-pay. Sixty-five percent of plan members on statins now take a generic. Those who switched have saved $108-$220 per year, and members who are pill-splitting a generic statin can get a year’s supply of therapy for as little as $28. Costs for statins were $2.7 million dollars less in 2007 than in 2006.
Generic PPIs
PPIs, like Nexium and Prevacid, are prescribed broadly to reduce the production of stomach acid. The availability of quality generics in the PPI drug class beginning in July 2007 allows plan members taking a brand name to move to a generic product, which is covered with a lower generic co-pay. For 2007 the projected reduction in total drug cost for the PPI class is $1 million.
At least 10 additional brand-name medications, including Paxil CR, Fosamax and Imitrex, are expected to become available as generics in 2008.
“A central focus in the future will be controlling cost and utilization for specialty medication, such as high-cost injectable, infused, oral or inhaled drugs for select conditions that require close supervision and monitoring,” Bruhnsen says. Specialty medication use is the fastest-growing segment of pharmaceutical spending at U-M, with a drug trend increase rate of over 13 times the rate for traditional drugs. Typical conditions include multiple sclerosis, rheumatoid arthritis and cancer. The School of Pharmacy Center for Medication Use, Policy and Economics has released a white paper outlining the recommendations to develop better methods to track and manage the use of these products ( www.umich.edu/~benefits/forms/SpecialtyDrugReport.pdf).
The prescription drug plan, implemented in 2003 and administered by SXC Health Solutions, was developed by faculty from the Medical School, the Nursing School and College of Pharmacy, along with U-M benefits experts. For more information go to www.benefits.umich.edu/plans/drugs.
