Perceived barriers to increasing drug plan savings

Over the last few years, plan sponsors have received a break on drug spending through falling generic drug prices and medicines going off-patent. But, with the arrival of new biologics on the market, drug costs may start climbing once again. External factors, such as coupon cards and brand marketing, also present significant barriers to generic utilization and cost savings. “Now is the time to implement a cost-effective drug plan to help encourage the use of generics when possible,” said Joanne Jung, director of pharmacy services at Pacific Blue Cross.

“We should be seeing a greater decline of brand utilization, but since the loss of patent exclusivity and despite the availability of generic versions, certain brand prescriptions have been on the rise,” explained Jung. “Drug plans may be paying more than they should.”

“Coupon cards are distributed by brand manufacturers as a way to maintain market share once their products lose patent,” she added. “They are distributed directly to patients online and through doctors and pharmacists. As a pharmacy benefits manager, our adjudication system is ‘blinded,’ so we have no idea if the cards are being used. But as we look at data, we should be seeing falling brand usage and stabilization. We aren’t necessarily seeing that.”

Several companies offer coupon cards, which claim to pay the difference between the generic price and the higher brand-name price. “There is a lot of persuasion to influence consumerism,” said Jung. “The top 10 brands represented 86.8% of the overall utilization of brand cards at one large Canadian pharmacy retail chain in 2013.”

It is believed that coupon cards are responsible for a rise in the number of “no substitution” prescriptions. Although the cards are supposed to pay the difference between the brand and the generic prices, a problem can arise for drug plans since the cards are not first payer, Jung said. For example, open plans without mandatory generic substitution would be on the hook for the full brand price, even if a lower-cost alternative is available and a coupon card is presented. Generic drug plans that accept prescriber-initiated “no substitution” would also be paying the brand cost because the pharmacist can override the generic pricing at the point of sale, allowing the plan to pay the full price of the brand.

Marketing is another way that brand manufacturers influence prescribing and consumer behaviour. Direct to consumer advertising of prescription drugs is banned in Canada, but consumers are exposed to full product advertising through American media. In Canada, “help-seeking” advertisements that mention conditions rather than the product brand are legal, as are “reminder advertisements” that include the brand name but no health claims. Canadian Cialis® ads, for example, don’t discuss the condition the drug is for, but mention the brand.

Jung, citing a 2002 survey that revealed two-thirds of general practitioners feel pressured to prescribe advertised drugs, said that ads focused on newer, expensive brands can drive up costs. Plan sponsors can help mitigate the impact of these initiatives by implementing a more restrictive generic-substitution/low-cost-alternative pricing provision in their drug plans.

“If they allow full payment of the brand drug simply when ‘no substitution’ is written on the prescription at the point of sale, the savings may not be as high as expected,” added Jung. “Instead, they should require medical evidence from a physician before accepting a ‘no substitution’ prescription, since less than 1% of patients have a legitimate medical reason for switching from a generic back to a brand-name drug. They also need to ensure that the generic has been tried first. Another strategy would be to not cover multi-source brands at all, as a way to limit the influence of coupon cards on consumers and physicians.”