Potential Savings from Generic Drugs in Upstate New York

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1 T H E F A C T S A B O U T Potential Savings from Generic Drugs in Upstate New York $880 Million in Potential Savings for Upstate New York Counties Finger Lakes Region $141 million Western New York Region $74 million Central New York Region $289 million Utica/Rome/North Country Region $229 million Southern Tier Region $149 million Estimate of potential savings if the prescription drug generic fill rate in each county of a region increased to equal the county with the highest generic fill rate across the 39 upstate New York counties. Based on January-June 2005 drug utilization data from FLRx that provides pharmacy benefit management services for more than 1.3 million people in upstate New York. Across the nation, the cost of prescription drugs has been widely cited as a major factor in the rising cost of health insurance premiums. About 19 percent of the benefits expense for a typical upstate New York health plan is spent on pharmacy benefits. Prescribing patterns, however, can vary significantly from region to region. As shown on this map, if every county in upstate New York were to increase its generic fill rate to match that of the highest performing county, the total annual savings would exceed $800 million. The generic fill rate is the percentage of all prescription drug fills that are generic drugs. One prescription fill is conventionally defined as a 30-day supply of drugs for treatment of a chronic condition, such as high blood pressure, or a single course of therapy for drugs used for treatment of acute conditions, such as a bacterial infection. 1 of 9

2 While there are clear variations in the generic fill rates of the five upstate New York regions analyzed in this report, there also are variations in the generic fill rates of the individual counties within each region. These variations at the county level result in a range of savings opportunities within each region. These county-level savings opportunities are outlined in the tables below. *Estimate of potential savings if prescription drug generic fill rate increased in each age group to the highest county rate for that age group of 39 Upstate New York counties. 2 of 9

3 Prescribing Variations by Age Group Medical need drives prescription drug use. The number and type of drugs prescribed varies greatly from person to person. However, for any large population, the number and types of drugs needed are very strongly associated with age. Each of the nine age groups used in this study has a different pattern of medical conditions being treated, as well as different therapeutic categories of drugs selected to treat them. Medical needs are also associated with other characteristics of populations (including behavioral factors such as diet, physical activity, and social support). As shown in these charts, the generic fill rate can vary significantly by age group. For example, the benchmark generic fill rate for the age 0 4 group is 72.3 percent, compared with the best practice generic fill rate of 57.1 percent for the for the age group. The potential savings within each age group reflects what would happen if every upstate NY county in this study increased its generic fill rate to equal the highest county rate for that age group. The savings potential also reflects the population of each age group, based on U.S. Census Bureau data. 3 of 9

4 Prescribing Variations by Region Prescribing patterns within each age group also vary from region to region. The tables below show the range of generic fill rates by age group for each of the five upstate New York regions. Within a particular age group, these ranges can vary significantly. 4 of 9

5 Savings Opportunities within Drug Therapies for Common Conditions The following pages profile the generic opportunities and cost savings associated with several widely used drug therapies that treat the following common conditions: heartburn/acid reflux, high cholesterol, and depression. For simplicity, we've profiled just one drug category used to treat each of three common conditions. For each of these conditions, there are multiple drug and non-drug therapies that are useful in treatment. The discussion of just one category per condition does not suggest that this category is the preferred treatment for all patients. An individual s health care provider should determine the best course of treatment. The three categories in this report are typically responsible for between 20-25% of a health plan s total drug expenditure. Prices among brand, generic and over-the-counter (OTC) drugs can very significantly. Condition Drug Brand Rx Generic OTC generic Savings opportunity Treated Category Cost* Cost* Cost per Rx (30 day supply) Heartburn/Acid Reflux PPIs $154 $48 $24 $130 High Cholesterol Statin drugs $155 $30 N/A $125 Depression SSRIs $105 $ 5 N/A $100 *represents the min/max for a usual 30-day supply for that category. The costs cited for brand drugs are based on the average wholesale prices listed in the Medispan national database as of 10/17/05. Generic drug and OTC prices are based on costs and reimbursement levels established for these drug classes by commercial insurers. An individual member may pay only a small portion of the total cost through their benefit copay or coinsurance (e.g., $5-$10 for a generic and $20-$50 for a brand). The pages that follow provide a more detailed overview of generic/otc drug opportunities in each of these three drug categories. For this analysis: For cost comparison purposes, we only include some of the dosage strengths or dosage forms available. We depict the generic fill rate for this category by region. Example: 30% means that 30 out of 100 prescriptions were for the generic options in that category. This provides a reference point to the type of savings possible. We designate which drug has been selected as a Consumer Reports Best Buy. What is Consumer Reports Best Buy? The Consumer Reports Best Buy Drug list is a public education project administered by Consumers Union. It is not affiliated with Excellus BlueCross BlueShield. Consumers Union and Consumer Reports selected the Best Buy Drugs using the following general criteria. The drug (and dose) had to: Be in the top tier of effectiveness among the available agents in their categories Have a safety record similar to or better than other drugs in that category Have an average price for a 30-day supply that is substantially lower than the most costly drugs meeting the first two criteria A more detailed explanation of the project and specific drug class criteria is available at Consumer Reports Best Buy Drugs should not be viewed as a substitute for a consultation with a medical or health professional. This report and the information on are provided to enhance communication with your doctor, rather than to replace it. 5 of 9

6 Savings Opportunity with Treating Heartburn, Ulcers & Stomach Acid Reflux Focus on Proton Pump Inhibitors (PPIs) Estimated Heartburn Rx (PPI) Rate by Region Finger Lakes Rate = 27.9% Central NY Rate = 18.2% Western NY Rate = 35.7% Utica/North Country Rate = 14.4% Southern Tier Rate = 16.5% Estimated Percent of Upstate New York Age Groups Using a Proton Pump Inhibitor What are Proton Pump Inhibitors (PPIs)? PPIs are used to treat heartburn, ulcers, and stomach acid reflux, also known as gastroesophageal reflux disease, or GERD. PPIs work by blocking an enzyme that makes the stomach produce more acid. This relieves heartburn, which is caused by stomach acid washing back up into the esophagus. All PPIs relieve heartburn and help heal the damage caused by GERD in the majority of people who take them. They are quite similar in effectiveness and safety, but PPIs differ greatly in cost. Age Groups Drug and Strength Type Avg. Cost 1 Nexium (esomeprazole) 20mg Brand $153 Aciphex (rabeprazole) 20mg Brand $151 Protonix (pantoprazole) 40mg Brand $123 Prevacid (lansoprazole) 30mg Brand $154 Prilosec (omeprazole) 20mg Brand $138 Omeprazole 20mg Generic $ 40 Omeprazole 20mg (Prilosec OTC) Over the $ 24 Counter 2 1 Average cost/month: a 30-day supply (one dose/day) using the current (10/17/05) Medispan average wholesale price for brands and approx. discounted reimbursement rate for generic and OTC. 2 OTC Prilosec is considered as a generic omeprazole option and covered as a generic drug under most FLRx drug benefit programs. 3 Taking effectiveness, safety, and cost into account, [the Consumer Reports] analysis concludes that over-the-counter omeprazole (Prilosec OTC) 20mg daily is the Consumer Reports Best Buy Drug. This is a proven medicine, now available without a prescription. It is as effective for most people as the more expensive prescription alternatives. All the PPIs relieve heartburn and help heal the damage caused by GERD in the majority of people who take them and they are quite similar in effectiveness and safety. Indeed, this very same medicine was not only the most commonly prescribed PPI before its patent lapsed in late 2002, it was the most widely prescribed drug in the country. Extracted from: Consumer Reports Best Buy Drugs A more detailed explanation of the project and specific drug class criteria is available at Consumer Reports Best Buy 3 6 of 9

7 Savings Opportunity with Treating High Cholesterol Focus on HMGs Statin Drugs Estimated High Cholesterol Rx (HMG) Rate by Region Finger Lakes Rate = 8.2% Central NY Rate = 2.9% Western NY Rate = 13.0% Utica/North Country Rate = 3.0% Southern Tier Rate = 3.2% Percent of Upstate New York Age Groups Using a Statin What are HMGs Statin drugs? Statins work by blocking an enzyme needed to make cholesterol. The body needs cholesterol to maintain good health. But high blood levels of certain cholesterol components (LDL or bad" cholesterol), as well as low levels of other components (HDL or good" cholesterol), are associated with a sharply increased risk of artery blockage, coronary heart disease, heart attack, and strokes. Age Groups Drug and Strength Type Avg. Cost 1 Lipitor (atorvastatin) 20mg Brand $118 Zocor (simvastatin) 20mg 3 Brand $155 Pravachol (pravastatin) 20mg 3 Brand $105 Crestor (rosuvastatin) 10mg Brand $ 93 Lovastatin 40mg Generic $ 30 1 Average cost/month: a 30-day supply (one dose/day) using the current (10/17/05) Medispan average wholesale price for brands and approx. discounted reimbursement rate for generic and OTC 2 Taking effectiveness, safety, and cost into account, [Consumer Reports] has chosen generic lovastatin as the Consumer Reports Best Buy Drug for this group. This medicine is substantially less expensive than other statins at the recommended doses of 10mg and 20mg. While the average LDL reduction with generic lovastatin is somewhat lower than other statins may yield, generic lovastatin will do just as good a job for the majority of people requiring an LDL reduction of less than 40%. And it has a long safety track record. Extracted from: Consumer Reports Best Buy Drugs 3 Generic options for Zocor and Pravachol are expected to become available in mid A more detailed explanation of the project and specific drug class criteria is available at Consumer Reports Best Buy 2 (for LDL reductions <40%) 7 of 9

8 Savings Opportunity with Treating Depression Focus on the SSRI class of drugs Estimated Depression Rx (SSRIs) Rate by Region Finger Lakes Rate = 51.9% Central NY Rate = 42.5% Western NY Rate = 51.9% Utica/North Country Rate = 41.6% Southern Tier Rate = 41.8% Estimated Percent of Upstate New York Age Groups Using an Antidepressant What are SSRIs? Antidepressants work primarily by affecting chemicals in the brain called neurotransmitters. The most important of these are serotonin, norepinephrine, and dopamine. There are several different types of antidepressants. The main group of second-generation antidepressants is called the selective serotonin reuptake inhibitors," or SSRIs for short. As implied, they appear to affect mainly serotonin levels in the brain. This group includes citalopram (Celexa), escitalopram (Lexapro), fluoxetine (Prozac), paroxetine (Paxil) and sertraline (Zoloft). Age Groups Drug and Strength Type Avg. Cost 1 Prosac (fluoxetine) Weekly Brand $105 Fluoxetine 20mg Generic $ 5 Lexapro (escitalopram) 20mg Brand $ 81 Citalopram 20mg Generic $ 7 Paxil CR 25mg Brand $ 94 Zoloft 50mg Brand $ 91 1 Average cost/month: a 30-day supply (one dose/day) using the current (10/17/05) Medispan average wholesale price for brands and approx. discounted reimbursement rate for generic and OTC. 2 Taking the evidence on effectiveness, safety, side effects, and cost into account, Consumer Reports has chosen 2 of the SSRIs as Consumer Reports Best Buy Drugs as options to consider in the treatment of depression: generic fluoxetine and generic citalopram. These medicines are substantially less expensive than other antidepressants, and they are as effective and safe as any of them for initial treatment. They are also affordable options if a person needs to try another antidepressant because the first one your doctor prescribed did not help or caused unacceptable side effects. Extracted from Consumer Reports Best Buy Drugs A more detailed explanation of the project and specific drug class criteria is available at Consumer Reports Best Buy 2 8 of 9

9 METHODS By comparing geographically defined populations (residents of an upstate county), much of the variation in types and amount of medical needs is eliminated (or averages out ). Because upstate New York counties differ somewhat in the age distribution of their residents, this report bases its analysis on drug use by individual age groups to make the county populations more comparable. For a variety of reasons, medical care providers in different counties make different choices. After averaging out drug use by comparing geographically defined populations of similar age, different choices among therapeutic alternatives (notably, generic vs. brand drug) explain a very significant fraction of the remaining variation in gross drug cost per person. Gross cost is the sum of out-of-pocket cost and any prescription drug benefit applied through insurance. This report applies linear regression methods to FLRx utilization data to estimate the relationships between the gross cost per person and the generic fill rate for the 39 counties for each of the nine age groups. The regression models are then applied to actual drug cost for each county in order to estimate what drug cost would be if the county had a generic fill rate equal to the highest generic fill rate achieved by any of the counties. Estimates from our samples are then extrapolated to the total county populations as estimated by the U.S. Census Bureau (Source: Population Estimates Program, Population Division, and U.S. Census Bureau. Release Date: August 11, 2005.) Finally, an adjustment is made to address the issue of pharmacy network discounts. One of the ways that health insurance plans affect the cost of medical care is by acting as shopper s clubs that are able to negotiate lower prices than are available to individuals without insurance for goods and services such as prescription drugs. The upstate New York population buys the same drugs at varying prices due to differences in discount rates are used by the pharmacies. The cost estimates in this report are adjusted to reflect a reasonable estimate of the discount upstate New Yorkers would receive compared with the estimated cash price customers without insurance would pay at retail pharmacies. (The estimated average is consistent with the findings of a national study for the U.S. Congress Government Accountability Office: Federal employees health benefits: Effects of using pharmacy benefit managers on health plans, enrollees, and pharmacies. GAO ). It should be noted that the upstate New York analysis presented in this report is based on currently available drugs and observed utilization by upstate patients. With new generic alternatives expected to become available in the second half of 2006 for several major brand drugs, there will be opportunities for additional drug cost savings in the near future. Additional Information on Potential Prescription Drug Savings 9 of 9

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