Greater use of generic drugs for chronic disease makes the cost of preventive health care much less than previously thought, research by CVS Caremark Corp., Harvard University, and Brigham and Women's Hospital finds.

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CVS: Generics yield bigger-than-expected savings

July 7th, 2011

WOONSOCKET, R.I. – Greater use of generic drugs for chronic disease makes the cost of preventive health care much less than previously thought, research by CVS Caremark Corp., Harvard University, and Brigham and Women's Hospital finds.

CVS Caremark said Thursday that a study released in the July issue of health policy journal Health Affairs concludes that preventive health care costs considerably less than earlier industry estimates because that research projected financial impact based on the costs of branded medications. Today, the cost to consumers and the health care system are much lower because generics are widely available for most chronic diseases, the researchers noted.

"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," Troy Brennan, executive vice present and chief medical officer of CVS Caremark and a study author, said in a statement. "This is a practical solution we need to focus on as we work to operate the health care system in a more cost-effective way."

For instance, CVS Caremark said, a 2008 study examining the prevention of cardiovascular disease used brand-name drugs to estimate the cost for lowering LDL cholesterol at $83,327 per quality adjusted life year (QALY), a financial measure that evaluates the impact of improving the quality of life for patients with chronic diseases. Today, recalculating for the same treatment using generic drugs would be $17,084 per QALY, or 20% of the original estimate.

And CVS Caremark pointed out that a more dramatic example is a cost comparison for treating for glucose control in cardiovascular patients, with the 2008 study estimating a $48,759 per QALY cost versus the study's recalculation with generics at $1,022 per QALY, just 2% of the original estimate.

As a result, generic medications are reshaping the economics of treating chronically ill patients, since over 70% of U.S. health care costs are spent treating patients with one or more chronic diseases, according to the researchers.

"Prevention of cardiovascular disease, the most common cause of death in the U.S., is central to any policy discussion about overall health care costs," the researchers noted. "Approximately 80 million Americans have some form of cardiovascular disease with annual costs in the U.S. reaching $475 billion. Cardiovascular disease prevention can be largely accomplished with low-cost generic medications."

Given the huge savings potential with increased generic utilization, the research team provided recommendations for policy makers, such as promoting the use of generics in the new accountable care organizations treatment standards; limiting the use of prescription writing practices such as "dispense as written," in which doctors and patients can require their prescription to be filled as a specific brand; amending state Medicaid statutes that require patient consent before generics can be substituted; and ensuring that electronic prescribing guidelines encourage the use of more cost-effective medications.

Other suggestions included developing education programs for physicians and patients about the effectiveness of generics as well as devising new incentive programs through pharmacy benefit and health care plans that promote generic drug use.

"There is no question prevention is more affordable with the use of generics," stated William Shrank, M.D., of Harvard and Brigham and Women's and lead author of the study. "Policy makers looking to improve and expand health care options should make sure generics are readily accessible for chronically ill patients. In addition, the topic of generics and effective preventive treatment should be central to any debate on making health care more affordable."

The Health Affairs study is a product of a three-year research collaboration between CVS Caremark, Harvard and Brigham and Women's Hospital that is focusing on understanding why many consumers don't take their prescriptions as directed and developing solutions to improve behavior of patients around their medications.

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