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Use of Generic Drugs Yields Big Savings

Generic drug use among employees rises to 79.2 percent, saving Duke $2.3 million

This rise in use of generic medicine saves employees on pharmacy co-pay costs and is projected to save the Duke health plan at least $2.3 million this year.
This rise in use of generic medicine saves employees on pharmacy co-pay costs and is projected to save the Duke health plan at least $2.3 million this year.

When Mary Driebeek swallows her daily medicine to treat rheumatoid arthritis, she's thankful she is able to use a generic medicine that works the same as a brand-name drug but saves her $80 every 90 days.

"If I used brand name drugs, it would cost a whole lot more," said Driebeek, a physician assistant at Duke.

Driebeek is among Duke health plan participants helping to increase use of generic drugs in the first quarter of 2011 to 79.2 percent, compared to 74.6 percent in the same period last year. This rise in generic use saves faculty and staff co-pays at the pharmacy and is projected to save the health plan at least $2.3 million this year, reducing the pressure to increase monthly health plan premiums.

"The percentage rate for generic use is important, because for every 1 percent we shift the needle up, the health plan can save about half a million dollars," said Kyle Cavanaugh, vice president for Human Resources.

The savings for Duke's health plans come from the vast difference in cost between generic and brand name drugs. The average cost to Duke's health plans for a generic medicine is $35.93, compared to $199.67 for a brand name drug.

Lois Ann Green, director of Benefits for Duke, said increased use of generic drugs reduces cost in the long term for employees and for Duke, since the inflation rate for brand name drugs is leaping forward at approximately 17 percent per year, while generics are rising by 0.7 percent per year.

"Only 20.8 percent of the drugs Duke health plan participants use are brand name, but that 21 percent accounts for 65.6 percent of the costs," she said.

Dr. Scott Joy, a Duke physician who has served on Duke's Human Resources pharmacy workgroup for the past year, said consumers are driving the increase in use of generic drugs because they realize they can save hundreds of dollars through lower co-pays and deductibles. "Patients are feeling the financial pressure of brand-name drugs," Joy said.

For Duke health plan participants, co-pays for generics drugs are significantly lower than for brand names. Since 2010, employees covered by Duke Select, Blue Care or Blue Options have the $100 pharmacy deductible waived when they fill a generic prescription.

Faculty and staff covered by all Duke health plans can save even more by filling 90-day prescriptions through Medco Mail Order or at Duke Pharmacies, where the co-pay for generics is capped at $20 for a three-month supply. The same amount of generic medication, purchased each month at a retail pharmacy, could rack up at least $30 in co-pays. The health plan  also saves when health plan participants use Medco or Duke Pharmacies for long-term prescriptions because Duke has negotiated discounts for high volume.

Driebeek, the physician assistant, is more than willing to use generics and mail order pharmacy services included in Duke's pharmacy benefit to reduce the cost of her medications. "If my insurance company gives me a method to save money every time I order medicine," she said, "I'll take it."