Drugs: Lower-cost Drug Substitutions Could Save a Lot

08/23/2013
Photo: Pills and dollars

Instead of brand-name drugs, the substitution of less expensive counter-
parts can save a lot of money for health care programs; © pantherme-
dia.net/Joe Belanger

A new study points to a simple solution that could result in hundreds of dollars in savings per patient when it comes to medication costs: Instead of brand-name drugs, substitute less expensive counterparts that have a similar therapeutic effect.

As everyone knows, medications are expensive, and even with insurance coverage, patients' out-of-pocket drug costs can be quite hefty. This holds true for individuals with Medicare Part D, also known as the prescription drug benefit, which subsidizes the cost of medications for about 28 million Medicare beneficiaries. About one-fifth of these Part D beneficiaries have out-of-pocket costs that top 100 dollars a month. As a result, some 10 percent are forced to use less medication than prescribed due to financial hardship. And while the program's low-income subsidy can help reduce costs for those with the greatest need, it does not reduce the overall cost of medications, so the government continues picking up most of the tab.

Given that both the government and Medicare beneficiaries have to deal with the high cost of medication, there is a need for strategies to reduce those costs. While the use of less expensive medications, a practice sometimes known as therapeutic interchange or therapeutic substitution, seems simple - and while about 90 percent of hospitals do it all the time - it is, not yet common practice in outpatient settings in the United States.

"The increase in prescription drug costs is not sustainable over time, and we need to consider alternative approaches that are more cost-conscious," said Dr. O. Kenrik Duru, an associate professor in the division of general internal medicine and health services research at the University of California. Los Angeles (UCLA). "Many patients are not aware that there is often a less expensive alternative to many popular medications that may work slightly differently but have a very similar therapeutic effect. While the appropriateness of substituting less expensive medication varies in different clinical situations, patients need to know about potential options so they can have informed discussions with their doctors."

The researchers compared the cost of the original medications to the substitutes and calculated the potential savings. This included savings for the patient, the health plan and, in some cases, for the government when it was subsidizing the cost. They found that 39 percent of Medicare patients receiving the low-income subsidy and 51 percent of patients not receiving the subsidy were eligible for a generic or therapeutic substitution.

For each generic substitution among patients receiving a subsidy, the government would save an average of 156 dollars per year, the researchers found. Each therapeutic substitution among subsidized patients would result in greater savings: The government would, on average, save 126 dollars per year, and the health plan would save 305 dollars per year. Patients not receiving the low-income subsidy would save 138 dollars per year for each generic substitution. For each therapeutic substitution, each patient would save, on average, 113 dollars per year, and the health plan would save 276 dollars per year.

The researchers noted that not every substitution is appropriate for every patient, and they acknowledged that in some clinical scenarios, potential substitutions have already been tried unsuccessfully or may not be appropriate at all. For these reasons, they listed cost-savings as a per-substitution figure rather than estimating potential savings across the entire system.

Also, the researchers said, these numbers are from a single health plan at one point in time and cannot be generalized to other health plans. But, Duru noted, "The purpose of this research was to provide a general estimate of possible potential savings."

MEDICA.de; Source: University of California – Los Angeles Health Sciences