Drug Cost Growth May be Limited by Therapeutic Substitution

Patients prescribed and dispensed a brand-name drug instead of an equivalent generic version spent an estimated total of $24.6 billion in excess prescription drug costs between 2010 and 2012, a new study has uncovered.

The study published in JAMA Internal Medicine sought to calculate the potential impact of therapeutic substitution—defined as when a brand-name drug is substituted for a generic within the same class but with different chemical compounds—on potential savings for both patients and the US health system.

Researchers analyzed Medical Expenditure Panel Survey data from 107,132 patients, along with their reported prescription use, between 2010 and 2012. They included drug classes that in a given year had a generic or widely accessible OTC medication as well as a brand-name drug without an available chemically equivalent generic in the same class.

Of the total $760 billion spent on prescriptions between 2010 and 2012, the amount spent on brand-name drugs when an in-class generic was available totaled $73 billion (9.6%). Patients were saddled with a significant portion of these excess costs, as total out-of-pocket spending on brand-name drugs instead of generics was $24.6 billion.

Notably, certain drug classes accounted for the vast majority of overall excess spending, including statins, atypical antipsychotics, proton pump inhibitors, selective serotonin reuptake inhibitors (SSRIs), and angiotensin receptor blockers.

“There was a large amount of excess expenditure on branded drugs between 2010 and 2012 in classes that could have incorporated therapeutic substitution,” the study authors concluded. “Although therapeutic substitution is controversial, it offers a mechanism to decrease drug costs if it can be implemented in a way that does not negatively affect quality of care.”

Therapeutic substitution is a controversial practice because of concerns relating to drug efficacy, adverse effects, drug interactions, and different indications for drugs despite being in the same class.

In an accompanying JAMA editorial, Joshua M. Sharfstein, MD, and Jeremy Greene, MD, PhD, pointed to a lack of education on generic alternatives as an underlying issue.

“Payers and clinical organizations interested in improving the value of health care should take additional steps to improve physician and patient understanding of generic drugs,” they suggested.

“This work is not easy; it requires close collaboration between physicians and pharmacists,” Joseph S. Ross, MD, MS, wrote in a separate accompanying JAMA editorial. “But the financial savings will be large.”

Study author Michael E. Johansen, MD, MS, told Pharmacy Times that the findings could have wide policy implications as the US health system continues to move toward a value-based care model.

“Given the amount of excess identified in this study, minimizing unnecessary branded pharmaceuticals could be pivotal to the success of value-based care models,” he explained.

Dr. Johansen believes that these broader trends might influence a physician’s propensity to prescribe a brand-name drug when a generic alternative is available.

“There is evidence that direct-to-consumer and physician advertising by pharmaceutical companies increases branded drug use,” he posited. “There is also some preliminary evidence that patients might perceive higher cost drugs as more effective, as has been shown in other fields.”

Nevertheless, Dr. Johansen said that the goal should be for health care providers to promote getting the right drug to the right patient at the right time.

“Essentially, it should be easy and incentivized for a clinician to prescribed the most cost-effective medication, which at present is rarely the case,” he asserted.

Although pharmacists currently play a minimal role in therapeutic substitution, Dr. Johansen said they are well positioned to empower patients with information regarding their medication options.

“A pharmacist could discuss with patients how there are much cheaper medications available in the same drug class that are FDA-approved for the same indication,” he said. “In the future, I’d like to see pharmacists and physicians have closer collaboration to ensure patients are getting the most effective drugs at the lowest cost.”