Private expenditures on brand name prescription drugs after generic entry

Dahlia Y Balaban, Irfan A Dhalla, Michael R Law, Chaim M Bell
Applied Health Economics and Health Policy 2013, 11 (5): 523-9

BACKGROUND: Generic drugs offer a less expensive and therapeutically equivalent alternative to brand name drugs. Nevertheless, many Canadian private drug plans continue to pay for brand name drugs even after generics become available.

OBJECTIVE: The objective of this study was to quantify the excess spending resulting from this practice.

METHODS: We used the IMS Brogan PharmaStat database to study private-plan drug spending in Ontario from 2000 to 2009. We focused on three widely used drug classes: proton pump inhibitors (PPIs), selective serotonin reuptake inhibitors (SSRIs), and angiotensin-converting enzyme (ACE) inhibitors. For each specific molecule, we determined the difference between what private plans spent on the brand name version and what would have been spent if an available generic version of the same molecule had been purchased instead.

RESULTS: We found that prescriptions paid for by private drug plans were often filled with brand name drugs after generics became available. This led to excess private spending of more than Can$107.8 million for these three drug classes over our study period: Can$54.4 million for PPIs, Can$32.4 million for SSRIs and Can$21.0 million for ACE inhibitors.

INTERPRETATION: Brand name drugs continue to be reimbursed by Canadian private drug plans at higher prices even after less expensive generic alternatives are available. By mandating generic substitution, substantial cost savings on benefit plans could be achieved.

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