A new study in the June 2016 issue of JAMA Internal Medicine found that between 2010 and 2012, an estimated $73.0 billion in excess of generic cost was spent on brand drugs within the same class.
A new study in the June 2016 issue of JAMA Internal Medicine found that between 2010 and 2012, an estimated $73.0 billion in excess of generic cost was spent on brand drugs within the same class, with much of the excess expenditure concentrated on a few drug classes. The estimate takes into consideration pharmaceutical rebates to payers as well as unique indications for branded medications and overuse estimates. In total, this accounted for nearly 1 in 10 dollars spent on prescribed medications, and patients were responsible for 33% of the total excess, or $24.6 billion in out-of-pocket expenses, concluded study authors Michael E. Johansen, MD, MS, of the College of Medicine at Ohio State University, and Caroline Richardson, MD, of the College of Medicine at the University of Michigan, Ann Arbor. The investigators sought to estimate potential savings on prescribed medications whenever therapeutic substitution—a system that allows the substitution of chemically different compounds within the same class—was possible.
Earlier studies of therapeutic substitution have suggested that large savings would result if it were adopted by Medicare Part D, and have shown that there is a high level of branded proton pump inhibitor use and expenditure even though a therapeutically equivalent generic medication is available. Some experts believe that because the prescription drug market became more efficient after states allowed for generic substitution of prescription drugs, therapeutic substitution should be allowed. However, therapeutic substitution remains controversial for many reasons, including strong opposition by physicians who perceive it as an encroachment on their autonomy, as well as concerns about efficacy, adverse drug effects, drug interactions, and different indications when drugs are changed because of therapeutic substitution.
The present study by Johansen and Richardson included 107,132 individuals, 62.1% of whom reported use of any prescribed medications. The expenditures were concentrated among statins, atypical antipsychotics, angiotensin receptor blockers, serotonin-norepinephrine reuptake inhibitors, selective serotonin reuptake inhibitors, and proton pump inhibitors. (Certain medicines were excluded from the study if they were not clearly included in a drug class (eg, aripiprazole), or if the drug was used for an FDA-approved indication for which there was no available generic medication. In total, the excess expenditure due to branded drug overuse accounted for 9.6% of total prescribed medication expenditure. Total out-of-pocket (OOP) expenditures were $175 billion between 2010 and 2012, of which OOP excess expenditure due to brand drug overuse was 14.1%.
“Although therapeutic substitution is controversial, it offers a potential mechanism to decrease drug costs if it can be implemented in a way that does not negatively affect quality of care,” the authors conclude.