Employers save money by implementing health plans that promote generic drugs

With generic drugs continuing to cost significantly less than their brand name counterparts, employers increasingly are implementing plan designs that promote their use.

“At some point, you're going to see formularies that are just generics,” said Brian Anderson, a consultant at Milliman Inc. in San Diego. “I'm not sure where the tipping point is, but we see clients with over 80% generic dispensing rates.”

Stephanie Ward, vice president of account management at Corporate Synergies in Mt. Laurel, N.J., said almost all of her clients are creating multitiered formularies, where generics are either free or as little as $5 per prescription, and then “really hiking up copays for brand and nonformulary drugs to get people to go to generics.”

Midsize employers “are capitalizing on the generic wave,” said Nadina Rosier, North America group and health benefits practice leader for pharmacy at Towers Watson & Co. in New York. “Some 30 brand name drugs lost patent in this last year.”

“While we recognize there are drugs where the generic may not be as clinically effective, there are many studies that show that generics are highly effective to treat nine out of 10 patients.”