There is insufficient competition in the generic drug marketplace, and market consolidation has led to price increases. Because of a lack of appropriate alternatives for these therapies, generic drugs may be expensive. However, shifting utilization to lower-cost alternatives can produce considerable plan savings.
To manage high-cost generics, payers can increase member cost sharing for these agents, creating an incentive to switch to lower-cost alternatives. Payers should identify clinically relevant, lower-cost therapies and engage in multichannel communication with the member, prescriber, and pharmacy to discuss alternatives.
When comparing alternatives, plans should consider total drug spend, cost per unit, cost per claim, cost per 30-day supply, and change in cost. To identify lower-cost alternatives, rank the generic drugs by total cost or total plan paid at formulation level and filter for those meeting the predefined cost threshold. Then, examine other drugs in the therapeutic class and indication; the costs should also be verified at the individual strength level, as this can differ and may not result in cost savings. However, once a change is made, the dynamic nature of the generic marketplace requires continuous monitoring of prices and costs.
Payers may not be interested in switching medications: In a survey published in the American Journal of Managed Care, 53.6% of members self-reported that they would rather pay the higher copay of a nonformulary status prescription medication, while 26.0% said they switched a medication on formulary. However, a copay differential can be a management strategy. According to MedImpact data, a greater proportion of members switched to lower-cost alternatives when there was a larger copay differential.
Utilization management strategies, such as uptiering, step therapy, and benefit exclusion, along with communication outreach can also help move members to lower-cost alternative treatments. Future directions for communication of these changes can include real-time prescriber notification of lower-cost alternatives through e-prescribing, outreach through text message and outbound calls, and optimizing member cost-sharing incentives.
