Blues To Broaden Generics Campaign

November 27, 2002
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Blue Cross Blue Shield of Michigan, citing an "incredible return" on its pilot initiative, plans to expand efforts to increase the use of low-cost generic medications.

The Blues will again mail out thousands of coupons to subscribers that waive the co-payment for the first time they have a prescription filled with a generic medication.

A trial project conducted a year ago with coupons mailed to 7,000 subscribers resulted in the savings of $190,000 in direct prescription costs, as well as member co-pays of $6,700.

The Blues reported that about 10 percent of those members who received one of the "free generics" coupons in the mail used it during the six-month trial that lasted from January to June, while another 10 percent tried generics without the coupon.

For the latest promotion, the Blues plans to mail 25,000 generic coupons to members later this month or in early January and will expand the list of covered drugs.

The initiative is part of a far broader campaign by the Blues to increase consumer awareness and use of generic medications when practicable.

According to the Blues, generics cost anywhere from 20 percent to 75 percent less than branded prescription medicines, and are gaining in popularity as employers try to stem escalating employee health benefit costs.

"Everyone saves when people use generic medications," said Glenn Perry, director of pharmacy services administration for Blue Cross Blue Shield of Michigan.

The utilization rate of generics by Blues subscribers grew two percentage points last year, to 38.1 percent, reversing a five-year decline (see chart). For October, use of generics was above 40 percent, Perry said.

Every 1 percent increase in the generic utilization rate generates a cost savings of $17 million for the Blues, Michigan's largest health insurer with about 4.8 million members statewide.

As health care costs continue to soar, and with many name-brand drugs coming off patent in the next few years, health insurers and managed-care companies are increasingly steering customers toward generics.

Promoting generics is now pretty much a staple of Blue Cross Blue Shield's marketing efforts, Perry said. In the face of soaring health care costs, even incremental savings such as those incurred through higher generic utilization rates are welcome, he said.

"It all adds up," Perry said. "This will pretty much be a permanent promotion for Blue Cross Blue Shield of Michigan."

A growing number of employers, seeking to mitigate ever-rising premiums, have been adding provisions to their health plans that provide financial incentives to employees to use generics.

About 40 percent of small businesses that buy Blue Cross Blue Shield coverage for their employers have incentives encouraging the use of generics now built into their prescription benefit. That's up from 10 percent a few years ago.

A three-month competition held a year ago among pharmacists across Michigan to encourage the use of generics over name-brand drugs generated $3.4 million in savings for Blues subscribers during the fourth quarter of 2001, or $13.6 million in annualized savings.

The Blues followed up the competition with a $1 million advertising campaign referring to "generic drugs — the unadvertised brand."

Spending on prescription drugs is the second-largest driver of rising health care costs, although it is slowing, according to an annual research report issued in September by the health care research group Center for Studying Health System Change.

Prescription drug spending rose by 13.8 during 2001, contributing about one-fifth of the total 10 percent rise in health care expenditures.

While still a sizeable increase, it compares favorably with a prescription-spending rise of 14.5 percent in 2000 and 18.4 percent in 1999.

The slowdown in spending growth reflects the increased use of health plans that place a greater burden of a prescription's costs on consumers and the introduction of fewer blockbuster drugs, the Center for Studying Health System Change stated.

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