‘Employers might consider adopting more stringent generic substitution policies’
Patients who buy branded medicines with the use of brand discount cards in Canada when generic alternatives are available are saving money — but they are also costing private insurers millions more, according to a study published in the Canadian Medical Association Journal.
The study — “Impact of brand drug discount cards on private insurer, government and patient expenditures” — found that use of these cards to purchase branded medicines resulted in out-of-pocket savings of $1.3 million for patients over a three-year period, but it cost private insurance $21.7 million more compared to what they would have paid for the generic alternative.
“Given that our analysis showed large increases for private plans, employers might consider adopting more stringent generic substitution policies to ensure value for money in drug spending,” said authors Michael Law, Fiona Chan, Mark Harrison and Heather Worthington.
The study looked at 2.82 million prescriptions for 89 different medications for which brand discount cards were used between September 2014 and September 2017.
In analyzing the private benefits cohort, the researchers looked at data from 939,608 branded prescriptions that involved a private insurer and no government payments, and 995,149 claims for generic prescriptions.
They found that patients spent $7.1 million towards the branded prescriptions with a brand discount card, compared to the estimated $7.2 million they would have taken out of their own pockets for the same mix for the generic versions. This represents a saving of about $108,000 in total and $0.12 per prescription — two per cent less than for the generics.
However, third-party insurers paid $69.4 million towards claims for branded medicines, compared with the $47.7 million they would have spent for generic prescriptions — a difference of $21.7 million. This shows that private insurers spent $23.09 or 46 per cent more per prescription for branded medicine compared to generic prescriptions, says the study.
Patients, meanwhile, paid $4.1 million out of their pockets for branded prescriptions in this cohort, whereas generics would have cost just $2.4 million, says the study after looking at 901,200 prescriptions for branded medicines with payment from a public drug plan and no private insurer payment, and comparing it to 1.45 million equivalent generic drug claims with the same payment characteristics. This represents a difference of $1.7 million in total and $1.86 per prescription.
Public insurers also spent more in this cohort, but the difference was not as pronounced compared to the private benefits cohort. The government paid $26 million toward 901,200 branded medicine claims, about $108,000 more than the researchers’ estimate of $25.7 million that they would have paid for 1.45 million generic drug claims. This represents an average increase of $0.37 or 1.3 per cent per prescription.
Patients who bought their branded medicines with their own money and brand discount cards also saved $1.3 million over the three-year period, based on 37,838 prescriptions for branded medicines ($17.3 million spent) and 355, 426 for generics ($18.7 million spent).
They saved $3.49 or seven per cent per prescription.