Brand name vs generic medications

We at PHC are big supporters of generic medications. They work as well as brand name drugs and cost less. Generic medications save society money and lower health care costs.

Let me also say that we at PHC have nothing against big pharma. They do wonderful research to develop innovative new medications and have created miraculous products which save lives. They are also economically very successful. Built in to their business model is the fact that after a period of exclusivity, the drugs they develop go off-patent and become available generically at lower cost. This reality is built in to the pricing of the brand name product during the period of exclusivity. No one needs to shed tears for the pharmaceutical industry. They are doing just fine.

So what about generics? Generic versions of brand name medications are not approved by the FDA unless they are bioequivalent to their brand name counterparts. Interestingly, but not surprisingly, there is still a lot of brand name prescribing for medications which are available generically. Why does this happen? Economics plays a big role. When there are no incentives to use generic medications, brand name drug usage remains high. When there are incentives to lower costs – either because of formulary restrictions or when patients have to pay out of pocket for their medications – brand name usage drops.

This reality was vividly demonstrated in a recent study published in Annals of Internal Medicine. The authors, from the VA, the University of Pittsburgh, and Dartmouth, compared diabetes medication usage among one million diabetics insured by fee for service (FFS) Medicare to usage among a half million diabetics cared for by the VA health system. FFS Medicare patients are cared for by many different health plans, each with its own approach to formulary issues and copays. VA patients receive their medications based on a single nationwide formulary which emphasizes use of generic medications where they are available.

Brand name medication use was substantially higher among FFS Medicare than among VA patients. Medicare patients’ use of brand name oral hypoglycemics was 3-fold higher than among VA patients. For the ACEI/ARB class of medications, just over half of Medicare patients used brand name drugs compared to 18% of VA patients. Similar findings were noted for statins and insulin products.

While the study did not look at differences in quality of care, several previous studies have shown equivalent or higher diabetes quality metrics for VA patients compared to Medicare and to commercial plans. So the higher use of generics does not come at the cost of compromising care.

The authors note that the VA strictly limits drug detailing and that the physician workforce is salaried, both of which contribute to the wider use of generic meds. Additionally, the authors attribute much of the generic use in the VA system to the policy of “therapeutic substitution,” which allows the VA to respond to a brand name prescription by dispensing a generic version of a different medication. For example, when atorvastatin was only available as Lipitor, Lipitor prescriptions were filled as simvastatin.

According to the authors’ analysis, if Medicare used the same formulary as the VA, it could save over $1 billion annually, just on medication costs.

While formulary guidelines can be a nuisance for the busy clinician, we want our valued clinicians to understand they do have a purpose. Our formulary guidelines are developed in consultation with practicing physicians in our network, and never compromise on quality of care. As always, we welcome your comments.

Richard Fleming, MD

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