September 4, 2013
Therapeutic Drug Substitutions Save Medicare Far
More Than Generic Equivalents

Los Angeles—How much could using therapeutic drug substitutions save compared to just substituting a generic equivalent?

The answer is a lot, according to a new study led by researchers from the University of California, Los Angeles. Using less expensive substitutes that are not equivalent but have a similar treatment effect as the original prescribed medication could double or even triple annual cost savings in Medicare Part D, compared with savings achieved with generic substitutions, according to the study published recently in the Journal of General Internal Medicine.

The researchers analyzed data for 145,056 low-income subsidy (LIS) beneficiaries and 1,040,030 non-low-income subsidy beneficiaries enrolled with a large, national Part D health insurer in 2007.

First identified were claims filled for brand-name drugs for which a direct generic substitute was available. Researchers then also pinpointed the 50 highest cost drugs separately for LIS and non-LIS beneficiaries, coming to a consensus on which drugs had possible therapeutic substitutes—27 for LIS and 30 for non–LIS.

Average daily costs of the original and substitute drugs were used to calculate the potential out-of-pocket savings, health plan savings, and when applicable, savings for the government/LIS subsidy for each possible substitution.

Overall, nearly half of all beneficiaries were eligible for a generic and/or therapeutic substitution. Generic substitutions resulted in annual savings of $127 to $160 per beneficiary, but therapeutic substitutions had the potential to reduce annual costs by $389 to $452 per beneficiary.

“Our findings indicate that drug substitution, particularly therapeutic substitution, could result in significant cost savings,” according to the authors. “There is a need for additional studies evaluating the acceptability of therapeutic substitution interventions within Medicare Part D.”

Examining savings that can be realized through generic and therapeutic substitutions is essential for lowering Medicare drug costs but may not be easily acceptable to prescribers or their patients, the report notes.

“Since Medicare is unable to negotiate volume purchasing discounts for medication, these substitution approaches represent an alternative cost-control strategy. Ultimately, however, both physicians and patients will need to make informed decisions about the various tradeoffs associated with those substitutions,” the authors conclude.

U.S. Pharmacist Social Connect