Health News
Potential Generic Drug Savings
February 7, 2021
Huge Potential Savings from Transitioning Members to Generic Drugs
Are you aware of this huge savings opportunity with this new generic drug?
Prescription drugs are a significant part of the cost of healthcare, especially when considering that up to 45 percent of people in the country used at least one prescription drug in the last 30 days (according to the National Center for Health Statistics / National Health and Nutrition Examination Survey, 2015-2016, https://www.cdc.gov/nchs/products/ databriefs/db334.htm).
Generic drugs are equivalent to their brand-named counterparts, typically cost less and are available for most health conditions. So how can employers and employees take advantage of generic drugs to save money on their healthcare plans?
We asked Jared Picore, Regional Manager of Costco Health Solutions, to explain how transitioning members of a company’s health care plan to generic drugs can have significant advantages.
Question: Tell us some of the brand-named drugs that have generic alternatives.
Jared Picore: There is a growing list of low-value products which plans should consider removing from their formularies. Those exclusions include popularly promoted products like Dexilant, Jublia, Luzu, Auvi-Q, etc. Each and every one of these products has a lower cost alternative that is just as effective. By removing this wasteful spending we can bring more value to patients and employers. New low-value products are coming to market continually. We have a process in place to monitor the market proactively to prevent wasteful spending.
Question: Are there any new opportunities we should be aware of?
Jared Picore: Yes. A great example of a new material opportunity is with a recently introduced generic for the drug Tecfidera.
Tecfidera is a commonly prescribed specialty medication to treat relapsing forms of Multiple Sclerosis. (MS). This is the seventh most costly medication in Costco’s own employer business. Most employers will have similar utilization and spend on this medication.
Question: How much can companies potentially save?
Jared Picore: A generic alternative became available October 1, 2020. For Costco’s own employees, Costco Health Solutions began immediately migrating patients from branded Tecfidera to the more affordable generic (Dimethyl Fumarate) saving $7,500 per utilizing month, or $90,000 savings per patient annually.
Based on our employee utilization, we are estimating more than $5 million in annualized savings.
Question: Do members save money on generic prescription drugs?
Jared Picore: Yes, based on the plan design, out of pocket amounts are usually a fraction of the cost for plan participants. This is a win for companies and their employees.
Question: Is there any pushback due to rebates on branded products?
Jared Picore: We understand that some pharmacy benefit managers might provide you with a response of, “the rebate on the branded product is better so we’re staying with the Brand.” For the brand Tecfidera to be a lower net cost the rebate would need to be in excess of $7,500 per claim. Rebate guarantees are not typically this high. Additionally, it’s important to understand the historical trend of this branded product. Per the chart below the list price of brand Tecfidera has increased from $7,216 to $9,369/month over a 5-year period, and as a result, unless your rebate guarantee increases each year to match the absolute inflationary increase, you lose value.
| Package Price | Effective |
| $9,931.07 | 1/1/2020 |
| $9,368.94 | 1/1/2019 |
| $8,838.66 | 1/1/2018 |
| $8,184.00 | 1/1/2017 |
| $7,578.00 | 1/1/2016 |
| $7,216.80 | 1/1/2015 |
Next Steps:
Has your pharmacy benefit manager made you aware of this savings opportunity? Any delay will result in a significant loss of savings.
If you haven’t had the discussion, we recommend you contact your pharmacy benefit manager today and inquire about the potential savings available to your plan.
If you need help, please don’t hesitate to reach out to CBC for assistance. We’ve found that the key to successful management of all high-cost drugs and providing quality care to our clients’ employees requires a consistent and proactive approach to new drugs entering the market and ongoing diligence from your selected vendor.
Blog Tags:
Generic Drugs, Prescription Drugs, Costco, Prescription, Dexilant, Jublia, Tecfidera, Prescription Discount, Generic Medicine, Prescription Cost, Medical Prescription
