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Insurers push generics
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August 20, 2001: 9:44 a.m. ET
Health providers urging doctors to prescribe cheaper drugs
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NEW YORK (CNNfn) - Merck-Medco has substituted generic Prozac for 80 percent of patients who use home delivery, the company said Monday, a week after the generic form of the anti-depressant hit the market.
Merck-Medco, the benefits management arm of Whitehouse Station, N.J.-based pharmaceutical maker Merck & Co. (MRK: Research, Estimates), also said it anticipates plan sponsors and members will save more than $40 million over the next six months as a result of the switch.
The move reflects health benefits companies' aggressive efforts to switch consumers to from brand-name drugs to cheaper generic forms, as insurers and employers grow more frustrated over the cost of prescription drugs, the Wall Street Journal reported Monday.
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Merck-Medco says it has achieved 80% substitution with generic Prozac (CNN/FILE) | |
"Generics deliver the same active ingredients as the branded products at a significantly lower cost, making necessary medicines more available to greater numbers of patients," Glen Stettin, Merck-Medco's vice president for clinical products, said. "The rapid acceptance of the generic for Prozac is impressive, and represents a major step forward in balancing quality health care with cost-effectiveness."
Besides Merck-Medco, Blue Cross Blue Shield of Michigan, which covers about half of that state's residents, is initiating a "Generic Drugs, the Unadvertised Brand," publicity and marketing campaign. The nonprofit insurer is announcing a competition among pharmacies to increase generic prescriptions, the Journal reported.
Switching to generics also means the chance for benefits providers and consumers to save significantly on pharmaceutical costs. In addition to Prozac, other drugs whose patents are about to expire include ulcer treatment Prilosec from AstraZeneca PLC and Claritin, the popular allergy treatment from Schering-Plough Corp. (SGP: Research, Estimates).
Prozac, which is marketed by Eli Lilly & Co. (LLY: Research, Estimates), is a tempting target since it is the nation's fifth largest-selling drug, with $2.7 billion in sales last year, the paper said. Within days of the generic form hitting the market, Merck-Medco contacted more than 25,000 doctors who most prescribe Prozac, urging them to switch, the company told the Journal. It also alerted online patients about its availability and cost savings potential.
Merck-Medco believes its customers could save more than $40 million over the next six months if conversions to the genetic fluoxetine continue at their current pace, the company said. Employers and health plans stand to save 20-40 percent.
The company said that within one month of hitting the market, enalapril, a generic cardiovascular drug, achieved close to a 90 percent substitution rate in home delivery, saving plan sponsors and members $2 million a month.
Meanwhile, in Michigan, Blue Cross eagerly awaits the arrival of a generic form of Prilosec, on which the patent is due to expire in October. Blue Cross spent $109 million on the drug last year, more than for any other pill.
Pharmacies that win the provider's generic prescription contest in the fourth quarter will win a spot in a million-dollar advertising campaign the insurer plans to unveil next spring.
Blue Cross said it spends more than $2 billion a year on prescription drugs, three-quarters of which goes for brand-name medicines, the Journal reported.
If its campaign can increase generic prescriptions to 41 percent from their current 38 percent in Michigan, Blue Cross and its rival insurers would save $100 million on pharmaceuticals, the paper said. 
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