By Using Generic Medications, Medicare Beneficiaries Would Save Combined $14B in 2003, Study Says

Using generic drugs more "appropriate[ly]" could save Medicare beneficiaries $250 billion over the next 10 years and could reduce by 16% the cost of providing a drug benefit under the program, according to a study by Brandeis University's Schneider Institute for Health Policy (Rovner, CongressDaily, 1/31). The study authors note that rising prescription drug costs are a "particular" problem for the elderly, who experienced an 18.5% increase in drug costs between 1997 and 2000, compared with a 16% increase for individuals under age 65. Often, the elderly are given costly, new brand-name medications when older, generic medications exist, the study says. The study, sponsored by the Generic Pharmaceutical Association, says it is the "first systematic" report to calculate the potential savings of seniors using more generic medications. Researchers from Brandeis University used prescription drug claims data from AdvancePCS, a pharmacy benefits management company (Wallack et. al, "Greater Use of Generics: A Prescription for Drug Cost Savings," January 2002). Researchers concluded that increasing use of generic medications to half of all prescribed drugs -- up from the current level of one-third of all drugs -- would lower spending on drugs from $1,647 per person to $1,377 per person per year (CongressDaily, 1/31). Increasing the percentage of generic prescriptions would save Medicare's 40 million beneficiaries a combined $14 billion in 2003 (Generic Pharmaceutical Association release, 1/31). The biggest savings would result from using generic medications for conditions whose treatments are the most expensive, such as ulcers and arthritis. Study author Stan Wallack said that using generic medications would "make a good [Medicare prescription drug benefit] more feasible" (CongressDaily, 1/31). The study is available online. Note: You need Adobe Acrobat Reader to view this report.