Blue Cross and Blue Shield

Groucho Glasses and Copay Waivers: How Some Blues Save by Promoting Generics

Reprinted from the issue of The AIS Report on Blue Cross and Blue Shield Plans, a hard-hitting independent monthly newsletter on business strategies, products and markets, mergers and alliances, and financing of BC/BS plans.

This past summer, a Blues plan attempted to gain the world record for most Groucho Marx glasses worn at the same time as a way to increase awareness of the value of generic drugs. It's just one example of Blues plans thinking outside the box to help control their drug spending.

Some Blues plans — among them, Blue Cross Blue Shield of North Carolina (BCBSNC), Independence Blue Cross (serving Philadelphia), and Excellus BlueCross BlueShield of upstate New York have increased member use of generic drugs through programs aimed at boosting awareness of their availability. Additionally, programs to promote generics, which include copayment or coinsurance waivers, have the potential of increasing medical compliance, pharmacy executives at the plans tell The AIS Report.

Increased generic utilization in 2007 saved BCBSNC an estimated $25 million in drug costs for the year, Ron Smith, Pharm.D., vice president of employer health and pharmacy at BCBSNC, tells The AIS Report. "We spent the money early on, but we're continuing to see the advantage of that money being spent." Smith explains that the company spent $80 million on generic drugs in 2006 to help promote the use of generic drugs. However, the real success of the program lies in the members' continued increase in usage of alternatives for brand-name drugs, he says. As of November 2007, generic usage was up to 62.4%, he says, from 51% before the waiver copay program.

"Our average brand cost is $123 per prescription; the average generic cost is $21 per prescription," Smith says. He contends, "You can easily see why having a person take a medication one-sixth the cost of the brand, and having a compliance rate that is 25% higher than the brand, why that makes good economical and medical sense."

"That's been the most encouraging thing — it looks like greater than 77% have maintained on those generics. One of the most interesting points that we saw for the program that really has helped us evolve the new approach is that when you look at certain chronic conditions, that overall consistency and compliance rates increased by about 25%."

BCBSNC implemented the generic copay waiver on Feb. 1, 2006, and expanded it from an end date of July 31 to Dec. 31 of that year. The program encompassed all but its Medicare products, including its administrative services only (ASO) products, for which the company absorbed the costs (it will not reap future savings from those contracts). The program led to higher-than-expected medical costs during the period, Smith says.

Independence Ends Generic Copay Waiver

Independence Blue Cross recently concluded its No Pay Copay program, which ran from Jan. 1, 2007, to Dec. 31, 2007, which gave members access to free generics. Paul Urick, senior vice president of pharmacy at Independence, says in an interview that the program saved members almost $50 million in 2007 — roughly the same amount of extra drug costs the company incurred. He notes that the program "was originally expected to run until the end of March 2007." He explains that "our goal was to increase utilization. It didn't seem our job was done in three months." Instead of ending it then, "We extended it because we saw a very robust response — positive feedback from members." During the initiative, Independence saw generic utilization increase from 52.1% to 58.3%. Urick predicts that generic utilization by Independence members will soon exceed 60%.

The plan has about 1.2 million members with drug benefits, says Urick. "Drug spend was roughly a billion dollars in 2007, which is pretty typical," he explains.

Independence implemented the program as a way to increase generic use, Urick says. "We looked at our utilization," he says, "It wasn't what it could be. The plan had to encourage members to look at generics because "unlike brand drugs, you don't see them advertised." Independence offered the waivers across all its products with the exception of federal programs such as Medicare Part D, he says, adding that a "very minimal" number of Independence's ASO clients chose not to participate.

Urick says there's no information to suggest the program led to higher medical costs. He asserts that "there is an up-front cost, but we felt it was the best thing to do. Over time, if [generic usage level] holds, we expect the program to pay for itself." Furthermore, he estimates that it will pay for itself through increased utilization of generics in about two years.

"When we had awareness numbers [of generic availability] in the near 90% range, we felt the program achieved its goal. We [ended the program] knowing that people would continue to use generics," Urick explains. He asserts that "87% of members say they will continue to ask for" generics, and 94% of members realize they can save money through purchasing generics.

While the plan has experienced an increase in the use of generic fills, Urick explains that "it's really hard to measure how much patient compliance increases with any intervention — there are so many things that affect compliance." He contends, "What we did find is the amount of generic drugs increased significantly.…We're hearing that members can access the drugs much easier now."

Still, Urick points out that "certainly all the clinical trials to date…suggest that if you take down barriers to care," members will be more compliant with their medication and their health will persist over time. To that end, the increased fill rates "would lead one to believe [members] were more compliant with their therapy since their fill rates are higher," he says. "That's a positive investment in our membership," he adds.

Additionally, Independence says that following the No Pay Copay initiative, 54% of members with chronic conditions, including those with diabetes or asthma, are now more likely to ask providers about generic medications than they were before the program. And among its overall membership, 32% are now more likely to ask about generic drugs.

"We will continue to use every touch point of communication we have access to," Urick says. The plan has employed many manners of communication to promote generics, including billboards, radio ads, mail and e-content sent to members. "We'll continue that same level of communication about generics going forward," he says.

Groucho Glasses Raise Awareness of Generics

Excellus operates in 39 upstate New York counties and manages drug benefits for roughly 1.3 million of its 2 million members, according to Joel Owerbach, Pharm.D., vice president and chief pharmacy officer at Excellus. He puts the plan's overall annual drug spend at more than $1 billion.

The plan has been heavily promoting and monitoring generic usage in its region since 2005. At that time, its generic fill rate was about 53.8%. It's gone up about 10.1 percentage points since then. During an interview with The AIS Report, Owerbach explains that over the one-year period between October 2006 and October 2007, the plan saw an increase in the use of generic fills to 63.9% from 60.1%.

Excellus' campaign to increase generic awareness has included an attempt to break the world record for the most Groucho Marx glasses worn at a time, which occurred at an August 2007 Syracuse Chiefs minor league baseball game, as part of its "Generics are REAL campaign." The campaign has the tagline, "Brand-name drugs are just generics in disguise."

According to Owerbach, the plan saved $70 million through increased use of generic drugs in 2007. "For every one-point increase in generic fill rate," he says the plan gets about $18.7 million in savings and "our members save about $3.1 million in out-of-pocket costs."

The plan has "a [free] generic trial program; it's the first fill of a grouping of about 10 different generic drugs," Owerbach explains. He adds, "We probably are at least up to 10,000 of those prescriptions a month."

According to Owerbach, Excellus is beginning to study whether compliance with treatment has gone up as a result of the campaign. "We're in the midst of evaluating that, but we don't have specific data," he says.

The campaign is "really aggressive," Owerbach asserts. It's a "campaign that engages all the different stakeholders in the process," including direct-to-member mailings and work with pharmacists and providers. The plan has developed prescribing summaries that explain the benefits of the generic drugs, and has sent more than 3,000 such kits to providers, he says. He adds that the program also is tied to its pay-for-performance program, rewarding providers for their generic fill rates.

The company engages employers with reports about generic usage and also works with legislators, employer coalitions and media to promote the use of generics."

Excellus surveyed more than 2,000 adults at the beginning of 2007 regarding generic drugs. "That really helped us hone in our message last year" about generics, Owerback explains. "We found that about a quarter of the people who were taking brand names did not know a generic was available," he notes. And about half the respondents said their provider "never asked them if cost of the prescribed drug was an issue for them. That went up to 70% in the senior market," according to Owerbach. The survey results show that there are "still opportunities" to increase awareness of generics; "people don't always know there's generic available." He says the plan always wants the member to ask the provider about generic alternatives to brand-name medicines.

"For the physician community, a lower-cost drug may lead to better compliance. It's a quality-of-care discussion," Owerbach says.

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