What question did this study set out to answer?

To estimate potential overall and out-of-pocket spending reductions from substituting branded drugs with generic alternatives in the same class and indication.

May 9, 2016JAMA Internal Medicine57 citationsOpen Access

Estimation of Potential Savings Through Therapeutic Substitution

MJMichael E. Johansen CRCaroline R. Richardson

Key Points

To estimate potential overall and out-of-pocket spending reductions from substituting branded drugs with generic alternatives in the same class and indication.
Repeated cross-sectional study analyzing 107,132 individuals from the nationally representative Medical Expenditure Panel Survey (2010–2012).
Evaluated excess expenditure from branded drug utilization across classes with available, same-indication generic equivalents using FDA and expenditure databases.
Overuse of branded medications caused an estimated $73.0 (95% CI, $67.6–$78.5) billion in total excess spending and $24.6 (95% CI, $22.6–$26.5) billion in excess out-of-pocket costs.
Excess branded drug spending accounted for 9.6% of all prescription drug expenditures and 14.1% of total out-of-pocket medication expenses.
The highest excess costs occurred with statins ($10.9 [SE, $0.41] billion), atypical antipsychotics ($9.99 [SE, $1.03] billion), proton pump inhibitors ($6.12 [SE, $0.38] billion), SSRIs ($6.08 [SE, $0.49] billion), and ARBs ($5.53 [SE, $0.35] billion).

Abstract

IMPORTANCE: Therapeutic substitution offers potential to decrease pharmaceutical expenditures and potentially improve the efficiency of the health care system. OBJECTIVE: To estimate potential savings through therapeutic substitution in terms of both overall and out-of-pocket expenditures of branded drugs when a generic in the same class with the same indication was available. DESIGN, SETTING, AND PARTICIPANTS: Repeated cross-sectional study using the 107 132 individuals included in the nationally representative Medical Expenditure Panel Survey (2010-2012) along with their reported prescribed medicine use. The Orange Book, company financial statements, US Food and Drug Administration records, and published research were used for adjunctive information. MAIN OUTCOMES AND MEASURES: Estimated excess expenditure due to branded drug overuse when a lower-cost generic in the same class with the same indication was available. RESULTS: The study included 107 132 individuals between 2010 and 2012, of whom 62. 1% (95% CI, 61. 4%-62. 8%) reported use of any prescribed medicine. A total of 31. 5% (95% CI, 30. 7%-32. 2%) used a medication from an included drug class, whereas 16. 6% (95% CI, 16. 0%-17. 1%) of the population used a branded drug from the included classes compared with 24. 0% (95% CI, 23. 4%-24. 7%) who used a generic and 9. 1% (95% CI, 8. 7%-9. 4%) who used both. In the included drug classes, the majority of the drugs were generics, with a total of 93. 5 billion standardized doses compared with 47. 4 billion standardized doses of branded drugs. Total expenditure of the branded drugs accounted for 147 (95% CI, 137-156) billion compared with 62. 7 (95% CI, 58. 9-66. 5) billion for the generics. Between 2010 and 2012, an estimated 73. 0 (95% CI, 67. 6-78. 5) billion in total excess expenditure and 24. 6 (95% CI, 22. 6-26. 5) billion in out-of-pocket excess expenditure was attributable to branded drug overuse. The excess was present across numerous drug classes throughout many aspects of medicine and equates to 9. 6% of total and 14. 1% of out-of-pocket prescribed medicine expenses. The drug classes with the highest excess expenditure included statins (10. 9 SE, 0. 41 billion), atypical antipsychotics (9. 99 SE, 1. 03 billion), proton pump inhibitors (6. 12 SE, 0. 38 billion), selective serotonin reuptake inhibitors (6. 08 SE, 0. 49 billion), and angiotensin receptor blockers (5. 53 SE, 0. 35 billion). CONCLUSIONS AND RELEVANCE: Although therapeutic substitution is controversial, it offers a potential mechanism to significantly decrease drug costs if it can be implemented in a way that does not negatively affect quality of care.

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