Managed Care - January 2009 - (Page 10)

MEDICATION MANAGEMENT sales will face generic competition, according to IMS. Box stores initiate price wars The popularity of, and demand for, generics has not been lost on retailers. Retail pharmacy generic discount programs have proliferated since Wal-Mart introduced $4 prescriptions for one-month supplies of hundreds of generics in mid-2006, and mass merchandisers and grocery stores responded with their own programs. The competitive trend in generics sales accelerated as Kmart began offering 90-day supplies of popular drugs for $15. Other retailers with in-store pharmacies and even drugstore chains followed suit, with some now offering generic drugs for as little as $10 for a three-month supply. Now big pharmacy chains like CVS Caremark, Walgreens, and Rite Aid are promoting discount drug programs as the economy declines and competition increases. Walgreens, for example, is strongly marketing its Prescription Savings Club. “I don’t know if I could call it a generic price war,” says Kermit Crawford, Walgreens’ senior vice president for pharmacy. “But pricing is very competitive within certain therapeutic categories.” And pharmacies in Stop & Shop grocery stores in Massachusetts are giving away some generic drugs. “This is so our customers don’t have to choose between filling a prescription and buying some other necessity,” said Faith Weiner, senior director of public affairs for the grocery chain, in a public statement. The generics will be given away until March 21. Insurers are aware of a shifting market and know that members are being bombarded by inexpensive offers for generic drugs. They are following suit and pushing ever harder for their members to purchase generic alternatives by sharply reducing — even eliminating — copayments. Several Blue Cross and Blue Shield plans are particularly aggressive. Blue Cross and Blue Shield of North Carolina, for example, announced in December that it will waive copayments for generic drugs between Jan. 1 and June 30. Blue Cross and Blue Shield of Min- nesota recently announced a similar program. Blue Cross and Blue Shield of North Carolina announced that its program is designed to encourage members to switch to cheaper medications. “We don’t want folks to have to choose between paying for prescriptions and paying their bills,” said Ron Smith, vice president for employer health and corporate pharmacy, in a public statement. Smith says that competition among generic manufacturers to gain market share among retailers is driving down wholesale prices overall, and in a declining economy his company wants to pass those savings to their members. It does cost BCBSNC money to offer free generics, and recently the company has seen members’ prescription use flatten overall. “But we do know that prevalence of diseases isn’t flat, so we want to encourage our members to keep refilling their prescriptions,” says Smith. Letters to patients Some insurers are pushing at the other end — they are sharply raising their copayments for many brand name drugs. The Associated Press reports that about a half-dozen Florida insurers recently sent letters to thousands of patients taking brand-name drugs that have generic equivalents that their prescription coverage will halt or their copayments will increase Jan. 1. Examples include the cholesterol drug simvastatin, which costs less than $1 per pill, in place of Lipitor (Pfizer), which has no generic and costs $3 per pill. In New York, insurers are reaching out to physicians aggressively. For example, Independent Health, a Buffalo, N.Y.-based insurer, offered doctors who prescribe 70 percent or more generic prescriptions in a month a bonus of 50 cents per patient per month. A doctor seeing 500 patients per month who meets the 70 percent minimum can collect $3,000 a year. Combined with retail price wars, such efforts imply that the role of generics as a mitigating factor in health cost hikes will increase significantly in coming years by significantly decreasing prescription costs. “For patients and insurers, all of this can only be good news,” says IMS’ Aitken. MC 10 MANAGED CARE / JANUARY 2009

Table of Contents Feed for the Digital Edition of Managed Care - January 2009

Managed Care - January 2009 Editor's Memo Contents Legislation & Regulation News and Commentary Medication Management Compensation Monitor Health Care's Disruptive Innovations Q&A With Clayton Christensen 'Disruption' May Be Plans' Best Bet Avoid the PBM Rebate Trap HealthPartners Puts Diabetes on Notice Formulary Files Plan Watch Tomorrow's Medicine Ad Index Outlook Unmet Needs in the Management of Plaque Psoriasis Impact of RSV: Implications for Managed Care

Managed Care - January 2009

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