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General Business IssuesHealth Plans Try New Tactics to Spur Generic Drug Utilization Reprinted from the Aug. 7, 2006, issue of issue of HEALTH PLAN WEEK (formerly Managed Care Week), the industry's leading source of business, financial and regulatory news of health plans, PPOs, and POS plans. As blockbuster medications lose patent protection this year, some insurers are employing a variety of strategies to boost generic drug uptake — such as waiving copayments for specific drug categories or moving medications that are about to get generic equivalents onto preferred formulary lists with lower copays. But others have shied away from drug-specific tactics and are instead focused on lower copays to encourage generic use. More than a dozen of the nation's best-selling prescription drugs have lost or are expected to lose patent protection this year through 2010. Most recently, the FDA approved generic versions of Merck & Co., Inc.'s cholesterol-lowering Zocor. Insurers such as Aetna, Inc. and HealthPartners, Inc., a Minnesota-based not-for-profit, are testing waived copays in new drug categories and other strategies to push generics, while UnitedHealth Group, Inc. and other insurers are taking case-by-case actions on generic promotion. Aetna is considering employing a cost-cutting strategy it used with Zocor to encourage generic uptake of other medications that will lose patents. The MCO pushed utilization of Zocor versus other cholesterol-lowering drugs such as Pfizer's Lipitor in advance of the June 23 launch of Zocor's generic version, simvastatin. As a result, the percentage of Zocor use among Aetna's members was double that of the national average, paving the way for the insurer to easily move members to the generic version. Merck approached Aetna to offer branded Zocor at prices below the generic. But Aetna declined the offer, saying that might muddle its message to consumers to choose generics first, said Eric Elliot, head of medical-related products for Aetna. Elliot said Aetna would consider using the same tactic it did with Zocor with other medications that will move off brand in the coming years. However, UnitedHealth took a different approach to Zocor. UnitedHealth and Merck reached a deal to keep Zocor on the cheapest tier of the insurer's formulary, while the generic would be on the third and most expensive tier. Timothy Heady, CEO of UnitedHealth Pharmaceutical Solutions, said the price to UnitedHealth to purchase Zocor was cheaper than for the generic. United will re-evaluate the tiers after the end of 180 days of exclusivity, during which the two currently approved versions of simvastatin are the only ones allowed on the market, Heady said. Insurers Test Waived Copays Aetna also tested waived copays for certain medications. The insurer in April began a six-month pilot program to waive copays for fully insured New Jersey members who switch to the generic 20-mg. dose of omeprazole, the generic version of Prilosec. The insurer says it spends $3 million annually on such generic proton-pump inhibitors for more than 19,000 New Jersey members. Although Prilosec is available over the counter, it is not available in the 20-mg. dose that the generic is sold in. In the first 12 weeks of the program, the insurer has seen an almost 5% market shift from Prilosec to the generic brand. "The idea here is how do I get additional use of the generic away from the therapeutic brand," Elliot said. Similarly, Horizon Blue Cross Blue Shield of New Jersey is exploring a short-term copay waiver for specific drug categories, said Margaret Johnson, the company's executive pharmacy director. Horizon BCBSNJ would consider maintenance-category drugs as part of the waiver, which could be tested in the next three to six months, she said. Step Therapy Tackles New Categories Step-therapy programs, in which health plan members are required to try the generic alternative of a medication before the plan will reimburse for the brand-name medication, have been used for several years in drug categories such as arthritis medication. However, employers are now looking to such programs to lower costs for blood-pressure medications, cholesterol-lowering drugs and even some antidepressants, according to Matt Gibbs, national pharmacy practice leader for Hewitt Associates, a benefits consulting firm. "This will help to drive to the lowest-cost alternative for employers within a therapeutic class, not just the single brand to generic entity," Gibbs said. HealthPartners, a Minnesota-based not-for-profit, began using this tactic about five years ago, and is considering expanding it across the board to several drug categories. For antidepressants and drugs used to treat hypertension, HealthPartners now encourages doctors to prescribe the generic rather than a branded product. Eighty-three percent of members who started on generics stayed on the generics, said Richard Bruzek, vice president of pharmacy services for HealthPartners. The "next frontier" in encouraging generics is to reward physicians for prescribing them through contract arrangements or bonuses, Bruzek said. HealthPartners began a pay-for-performance program in 2003. Lower Copays Remain Key Strategy Still, the most potent tool insurers are using to encourage generic uptake is making copays lower for generic drugs, said James Hartert, M.D., medical director at Prime Therapeutics, LLC, a PBM collectively owned by several Blue Cross and Blue Shield plans. "We have become more cautious around individual, drug-specific strategies," he said. While others have built programs around a generic version of brand-name drug becoming available, Hartert said he's shied away from that strategy. "It's not just promoting the new generics, but the existing ones as well," he said. Heady said UnitedHealth
would consider moves similar to its arrangement with Merck in the future,
if the branded drug could be made available more cheaply than the generic
version. "Our view is that we don't think that our customers should
ever pay a premium for a generic," he said. "When a generic
hits the right price point and it's truly achieving health care savings,
then we will treat it like a generic," he said.
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