Live in New York or New Jersey? Better speak up and ask for that generic drug.

British real estate developer Lord Harold Samuel once said, “There are three things you need in property. These are location, location, and location.” Apparently the same is true when it comes to prescribing generic drugs for Medicare beneficiaries, too.

According to the Express Scripts 2012 Drug Trend Report, where you hang your hat will frequently determine how often your doctor will prescribe a generic drug for you: Medicare providers in New Jersey, New York, and southern states such as Texas and Louisiana prescribe fewer cost-saving generics than their counterparts in Midwestern states such as Ohio and Wisconsin.

“A prescriber’s geographic location is a strong predictor of the proportion of generic prescriptions they write,” says Sharon Frazee, vice president, Research & Analysis, Express Scripts. “Location encompasses many features that have a complex influence on prescribing and utilization.” Some of the regional features that influence the prescribing and utilization of generic drugs include income levels, the impact of media markets and advertising dollars, and the proximity to urban centers and healthcare services.

Here are some other interesting trends that can help predict which healthcare providers are more apt to prescribe generics:

• Younger, less tenured healthcare providers, including physicians, nurse practitioners and physician assistants, are more likely to prescribe generic medications to Medicare patients than older providers with more years in practice.
• Prescribers who care for a large number of Medicare patients are more likely to prescribe generics than those with fewer Medicare patients.
• Prescribers who practice in rural areas adjacent to large cities are more likely to prescribe generics than prescribers in metropolitan areas and urban centers.

One possible explanation for these findings has to do with habit and experience: Some healthcare providers have been practicing medicine longer than many generic drugs have been on the market. They may prescribe the brand drugs with which they are familiar and that have worked well for their patients out of habit, without giving any thought to the cost. If their patients don’t speak up and ask about generic drugs, they’ll immediately fill out the script for the brand-name drugs they know the best (this is especially true if the physician has pre-printed scripts for certain popular brands).

As I have mentioned in previous posts, brand-name drugs, especially “blockbuster drugs” like Lipitor® and Plavix®, are often a lot more expensive than their generic counterparts. And if pricing trends from 2011 to 2012 are any indication, I wouldn’t expect prices on brand-name drugs to come down anytime soon.

The increasing availability of lower-cost generic drugs offers significant savings opportunities for Medicare beneficiaries – but unless you speak up and specifically ask your healthcare provider to prescribe generics whenever possible, you may never enjoy these added savings. Especially if you live in New York or New Jersey.

Expect higher Medicare co-pays for brand-name drugs in 2012

I’ve said it once and I’ll say it a hundred times: Lower-priced, FDA-approved generic drugs are the best way to go if your doctor says they are right for you and your condition. Here’s just one more reason why.

Starting in 2012, your Medicare prescription drug plan co-payments for many brand-name drugs could go up significantly.*

According to a recent study by data analysis firm Avalere Health, co-payments (the portion of the prescription cost that you pay the pharmacy) for Tier 3 preferred brand-name drugs will increase by 40 percent on average next year, from $29.01 in 2011 to $40.60.  Preferred brands are those drugs for which your Part D plan has negotiated a discount with the manufacturer.

In addition, Tier 4 non-preferred brands will average nearly 30 percent more, from $71.52 this year to $91.67. You’ll also pay a bigger share of the cost of specialty drugs—about 32 percent compared to about 27 percent this year. That may not sound like much, but when you consider specialty drugs can cost $1,000 or more per prescription, a 5-point cost-share increase could be huge.

 

Co-pays for generics will remain stable or decline

Now for the good news. According to this same study, co-pays for preferred generics will remain stable (about $3.79 on average) in 2012 while co-pays for non-preferred generics will decrease to $9.90 on average. This drop is a 43 percent reduction from the current average cost of $17.29.

According to Avalere CEO Dan Mendelson, the study emphasizes how important it is for Medicare beneficiaries to review all of their Part D plan’s costs before Open Enrollment ends December 7.

As I’ve mentioned before, if you’re shopping around for a new Medicare Part D plan, you should look for a plan that offers the lowest total cost based on the medications you take. It doesn’t help to choose a plan with the lowest monthly premium, only to find out weeks or months later that you’re going to pay more in the long run because the co-payments for your medications are higher in this “low-cost” plan or the cost of your annual deductible has increased.

* Avalere figures shown are averages for the entire Medicare Part D program. Actual costs could vary markedly by medication, plan, and region of the country.

Popular brand-drug patent expirations represent $9 billion+ in savings for Medicare beneficiaries

You probably already know that the standard Medicare Part D benefit includes a 50% discount on most brand-name drugs during the Coverage Gap stage.  What you may not know is that even with the discount, lower-cost generic drugs could still help you save more all year long.

Using generic medications instead of brand-name drugs is one of the best ways to lower your overall costs. And here’s even better news: Frequently used brand-name drugs such as Lipitor®, Lexapro®, Seroquel®, and Singulair® are expected to come off patent in 2012. These drugs currently account for more than $31 billion in retail sales. The new generic versions of these drugs could represent more than $9 billion in incremental savings opportunities for Medicare beneficiaries.

Generics are a great choice for savings and quality 

If you’re like me, when you think “generic” you may not always think “quality.” Given the choice of my favorite brand of raisin bran cereal for $3.99 or the generic no-name brand for $2.99, I’ll pay the extra dollar any day. Same goes for brand-name yogurt, shampoo, bread, or body lotion. The brand-name product just seems to taste or work better than the no-name versions.

 But FDA-approved generic drugs have been tested for quality and strength, and are as safe and effective as their brand-name counterparts. Generic drugs look different, but you can expect them to provide the same health benefits as their brand-name counterparts—often at a lower cost to you.

 I always ask my doctor to prescribe the generic drug if it’s available, because I know it will work just as well but cost so much less. In fact, according to the Food and Drug Administration, generic drugs can cost 30 percent to 80 percent less than brand-name drugs.

So if you’re taking a brand-name medication, ask your doctor whether a lower-cost generic drug could work for you. Keep in mind there are two types of generic drugs:

• A generic equivalent contains the same active ingredients as its brand-name counterpart and works the same way in your body.

• A generic alternative may contain different active ingredients, but is used to treat the same condition.

Remember, your doctor wants to help keep your medications affordable, so it’s always okay to ask if the prescription can be written for a generic drug. You deserve to save money, so don’t be afraid to just ask!

The Medicare Coverage Gap Discount Program

What the Drug Makers Don’t Want You to Know, Part I

Although the Coverage Gap Discount Program is no doubt very helpful if you reach the Coverage Gap (aka “donut hole”) and use brand-name drugs, what you may not know—and what the big drug companies hope you never figure out—is that even with the 50% discount on brand-name prescription drugs, lower-cost generic drugs are still the best deal in most cases.

For the past year, nonprofit groups and the media have all been touting the 50% brand discount as a great way to lower drug costs when you’re in the Coverage Gap. What they should be telling you, however, is although the discount is helpful, the real savings lie in generics, no matter what stage of the benefit you’re in. Generic drugs make the most sense in every benefit stage.

I’ve always recommended FDA-approved generic drugs as one of the best ways to lower your drug costs and delay entering the Coverage Gap. Not only do they generally cost up to 80% less than brands to begin with, but now you get an additional 7% discount on generics when you’re in the Gap. (In 2012, you’ll get a 14% discount on generic drugs in this stage.) 
 So even with the 50% discount on brand-name drugs, generics still make more sense.

With the generic version of Lipitor set to hit the shelves in November, let’s compare Mrs. Smith’s costs for Lipitor with Mr. Johnson’s costs for the generic version of Lipitor as an example:

Mrs. Smith Uses the Brand-Name Drug Lipitor
• During the Initial Coverage period, Mrs. Smith has a 25% co-payment on brand-name drugs. She pays $32.25 for a 30-day supply of her brand-name cholesterol drug, Lipitor.
• Mrs. Smith always uses brand-name drugs, so she reaches the Coverage Gap in July. Now she has to fork over $67.08 for Lipitor. This is the full cost of the drug minus the 50% discount!

Mr. Johnson Uses  Generic Drugs
• During the Initial Coverage period, Mr. Johnson pays $3.27 for a 30-day supply of simvastatin, which is a generic version of Lipitor.
• Mr. Johnson always uses generic drugs so he never reaches the Coverage Gap. But if he did, he’d pay only $13.11 for simvastatin. This is the full cost of the drug minus the 7% discount.

I know I’d much rather pay $13.11 for a generic that’s just as safe and effective as its $67.08 brand-name counterpart. I also know the big pharmacy companies are not happy I’m sharing this information with you, because they want you to buy their expensive brand-name drugs. They hope that by playing up the 50% discount, seniors will continue to stick with brands. I hope that having read this, you now know better.

In Part 2 of this series, I’ll share another little-known fact about the Discount Program that doesn’t make any sense at all.

Reminder: Open Enrollment for 2012 is October 15 through December 7, 2011.