Realized Savings from Generic Drugs in Upstate New York

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1 T H E F A C T S A B O U T Realized Savings from Generic Drugs in Upstate New York More Than $130 Million Saved in 2006 Compared With 2005 Finger Lakes Region Estimated generic savings: $29 million Generic fill rate: Oct. 2005: 55.6% Oct. 2006: 63.0% Western New York Region Estimated generic savings: $37 million Generic fill rate: Oct. 2005: 60.0% Oct. 2006: 65.6% Central New York Region Estimated generic savings: $29 million Generic fill rate: Oct. 2005: 48.4% Oct. 2006: 55.3% Utica/Rome/North Country Region Estimated generic savings: $24 million Generic fill rate: Oct. 2005: 47.7% Oct. 2006: 54.7% Estimate of realized savings in the 39 upstate New York counties based on a projection of what total prescription drug costs would have been if 2006 generic fill rates had remained at 2005 levels. Based on October October 2006 drug utilization data from FLRx that provides pharmacy benefit management services for more than 1.3 million people across upstate New York. Southern Tier Region Estimated generic savings: $15 million Generic fill rate: Oct. 2005: 48.2% Oct. 2006: 55.7% A December 2005 fact sheet that analyzed the use of generic drugs across upstate New York found that that if every upstate county were to increase its generic fill rate to match the highest performing county, the total annual savings would exceed $880 million. Since that analysis was issued, there have been measurable increases in generic fill rates across all upstate New York regions, resulting in realized savings totaling more than $130 million. The average generic fill rate for the total upstate population improved from 53.8 percent in October 2005 to 60.1 percent in October 2006, an increase of 6.3 percentage points. There remain clear variations in the generic fill rates of the five upstate New York regions, as well as of the individual counties within each region. While 14 counties had generic fill rates below 50 percent as of October 2005, the county-level generic fill rates in October 2006 ranged from 50.8 percent in Fulton County to 66.5 percent in Erie County. 1 of 5

2 The graph to the right shows a rapid increase in the generic fill rate for the entire upstate New York population. These month-by month estimates were made by weighting FLRx data by age group and county and extrapolating the data to the total population by age group and county. FLRx data is based on the pharmacy benefit management services provided for more than 1.3 million people across upstate New York. The total population figures used in the calculations are the latest available from the U.S. Census Bureau (released August 4, 2006) The generic fill rate is the percentage of all prescription drug fills that are generic drugs. One prescription fill is conventionally defined as a 30-day supply of drugs for the treatment of a chronic condition, such as high blood pressure, or a single course of therapy for drugs used to treat acute conditions, such as bacterial infection. Prescribing Variations by Region 2 of 5

3 Generic Fill Rates within Drug Therapies for Common Conditions The December 2005 fact sheet on potential generic drug savings highlighted savings opportunities available within drug therapies for three common conditions: heartburn/acid reflux, high cholesterol, and depression. These three categories are typically responsible for between percent of a health plan s total drug expenditure. Heartburn, Ulcers and Stomach Acid Reflux Generic Fill Rates for Proton Pump Inhibitors (PPI) As shown in the accompanying charts, the generic fill rates in these three categories have increased significantly in all five regions of upstate New York. The increase in the use of generic statins for high cholesterol was especially high due to the patent expiration of Zocor and Pravachol in mid-2006, and the mid-year patent expiration of Zoloft contributed to the increase in the use of generic SSRIs for the treatment of depression. How These Drugs Work What are Proton Pump Inhibitors (PPIs)? PPIs are used to treat heartburn, ulcers, and stomach acid reflux, also known as gastroesophageal reflux disease, or GERD. PPIs work by blocking an enzyme that makes the stomach produce more acid. This relieves heartburn, which is caused by stomach acid washing back up into the esophagus. All PPIs relieve heartburn and help heal the damage caused by GERD in the majority of people who take them. They are quite similar in effectiveness and safety, but PPIs differ greatly in cost. What are HMGs Statin drugs? Statins work by blocking an enzyme needed to make cholesterol. The body needs cholesterol to maintain good health. But high blood levels of certain cholesterol components (LDL or bad" cholesterol), as well as low levels of other components (HDL or good" cholesterol), are associated with a sharply increased risk of artery blockage, coronary heart disease, heart attack, and strokes. High Cholesterol Generic Fill Rates for HMGs Statin Drugs Depression Generic Fill Rates for SSRIs What are SSRIs? Antidepressants work primarily by affecting chemicals in the brain called neurotransmitters. The most important of these are serotonin, norepinephrine, and dopamine. There are several different types of antidepressants. The main group of second-generation antidepressants is called the selective serotonin reuptake inhibitors," or SSRIs for short. As implied, they appear to affect mainly serotonin levels in the brain. This group includes citalopram (Celexa ), escitalopram (Lexapro ), fluoxetine (Prozac ), paroxetine (Paxil ) and sertraline (Zoloft ). 3 of 5

4 Factors Driving the Increase in Generic Fill Rates From October 2005 to October 2006, the generic fill rates across the five regions of upstate New York improved by 6.3 percentage points. This increase is due to a number of factors, including a growing public acceptance of generic drugs. The introduction of new generic alternatives has also increased the generic fill rates in some drug categories. During the one-year period covered in this analysis, the generic versions of the following drugs have become available. Brand Drug Generic Name Generic Available Used to: Zithromax azithromycin November 2005 Treat common infections Flonase Nasal Spray fluticasone nasal spray March 2006 Treat allergic rhinitis Pravachol pravastatin April 2006 Lower cholesterol Proscar finasteride June 2006 Treat prostrate enlargement Zocor simvastatin July 2006 Lower cholesterol Mobic meloxicam July 2006 Treat inflammation/pain Effexor venlafaxine August 2006 Treat depression Plavix clopidogrel August 2006 Prevent stroke Zoloft sertraline August 2006 Treat depression Future Opportunities for Savings As public education efforts continue and new generic alternatives become available in 2007, additional savings may be achieved across upstate New York. In 2007, generic versions of the following drugs are expected to become available. Brand Drug Generic Drug: Anticipated Availability Used to: Zofran January 2007 Treat or prevent nausea Aceon March 2007 Treat high blood pressure Tilade April 2007 Treat asthma Ambien May 2007 Treat insomnia Clarinex July 2007 Treat allergy symptoms Lamisil July 2007 Treat fungal infections Exelon September 2007 Treat Alzheimer s Coreg September 2007 Treat congestive heart failure Cognex September 2007 Treat Alzheimer s Geodon September 2007 Treat mental health disorders Lotrel October 2007 Treat high blood pressure Norvasc October 2007 Treat high blood pressure, angina Tricor November 2007 Lower triglycerides Toprol XL November 2007 Treat high blood pressure, congestive heart failure Mavik December 2007 Treat high blood pressure 4 of 5

5 METHODS In contrast to the December 2005 generic drug fact sheet that analyzed potential savings opportunities with generic drugs, this fact sheet estimates the actual savings realized by upstate New York counties during a one-year period from October 2005 to October The analyses for these fact sheets were done by FLRx, Excellus BlueCross BlueShield s pharmacy management division. FLRx provides pharmacy benefit management services for more than 1.3 million people across upstate New York. The potential savings fact sheet had applied linear regression methods to FLRx pharmacy utilization data for 39 upstate New York counties to estimate what each county s drug cost savings would be if each county had a generic fill rate equal to the highest generic fill rate achieved by any of the counties. This fact sheet uses FLRx utilization data for the same 39 counties to estimate the realized savings achieved by each county as a result of the actual generic fill rate increases that have taken place over a one-year period. This analysis takes each county s monthly FLRx data for nine age groups and extrapolates it to each county s total population. This provides the total number of pharmacy fills, generic fill rate, and drug cost (patient s cost plus any pharmacy benefit) for each county by month. Total county populations are from the U.S. Census Bureau (Population Estimates Program, Release Date: August 4, 2006). Savings are estimated as the difference in generic fill rate (for each age/sex/county band) in each 2006 month compared with the same month of the previous year (e.g., January vs. January), multiplied by the estimated number of total fills, multiplied by the difference between average brand and average generic cost for the entire upstate FLRx population (for that month and age group). These estimated incremental savings per month are summed to generate the 2006 generic savings estimate. The results presented are point estimates, each of which should be interpreted as having a confidence interval that would include errors such as those resulting from differences between FLRx members drug use and use by the remainder of the upstate population, and differences in pharmacy network discounts. (One of the ways that a health insurance plan affects the cost of medical care is by acting as a shopper s club that negotiates lower prices than are available to individuals without insurance coverage for prescription drugs. The upstate New York population buys the same drugs at varying prices due to differences in the discount rates that are used by pharmacies. This analysis did not attempt to adjust average FLRx prices to total population average prices.) The generic drug savings identified in this analysis are realized by a variety of different stakeholders, including patients (less out-of-pocket cost for drugs), companies and organizations (lower health insurance premiums), and taxpayers (less for publicly supported pharmacy benefits, such as those for Medicaid recipients and government employees). Additional Information about Prescription Drug Savings go.excellusbcbs.com/generics 5 of 5