At a time when state fiscal woes are forcing cuts in Medicaid, researchers at the Division of Pharmacoepidemiology at Brigham & Women’s Hospital in Boston and Harvard Medical School have identified a policy with at least $100 million in potential savings: make generic substitution policies work more effectively.

A new study in the July issue of Health Affairs highlights savings opportunities some state Medicaid programs could take advantage of by changing their generic substitution laws.  Currently, 39 state programs require patient consent for pharmacists to substitute a prescribed brand name drug for a generic.

Given the strong influence of pharmaceutical marketing, patients often have an unwarranted negative view of generic drugs, requesting more expensive branded options when they are not necessary.  Generics are certified by the FDA to be chemically equivalent to their brand name counterparts.  The rationale for allowing pharmacists to voluntarily substitute generics is to ensure that Medicaid is not wasting money.  Saving money protects access to care in budget-stressed programs like Medicaid.   By leaving the generic substitution decision to pharmacists, states could expect to save more than $100 million on just three top-selling medications—Plavix, Lipitor and Zyprexa— that are nearing patent expiration.

The study, led by Dr. William H. Shrank, looked at the relationship between Medicaid policies on generic substitution and the use of the cholesterol drug simvastatin vs. Zocor, its branded equivalent, after Zocor’s patent expired in June 2006.  While all states have adopted generic substitution laws, the extent to which pharmacists or patients can influence the medications they choose differs from state to state.  The Harvard researchers found that states that did not require patient consent to switch prescriptions from Zocor to the clinically equivalent, less costly simvastatin saved $15.35 per prescription on these medications in the first quarter after patent expiration.  If all states had adopted such policies, Medicaid programs could have saved $19.8 million nationwide on the introduction of simvastatin.

While patients should be empowered to participate in their own health decisions, this study demonstrates that requiring patient consent for generic substitution impedes patients from initially choosing generics even when they will eventually prefer them to the brand name.  After four financial quarters, the rates of choosing generic simvastatin over Zocor begin to converge between states that require consent and states that do not.  Patients in both states will eventually choose to take advantage of the cost savings from choosing the safe, effective, and cheaper alternative.  But for patients in states that do require consent, the cost savings come at a slower pace.  And in the case of Zocor, that meant $19.8 million in foregone savings for state Medicaid programs—savings that could have been used to protect access to care.

The study comes as welcome news for patients and policy makers at a time when state Medicaid programs are facing severe budget cuts.  Generics cost, on average, 30-80 percent less than brand name competitors.

Marcia Hams, director of prescription access and quality at Community Catalyst, stressed the great importance of these findings in light of Medicaid shortfalls in a recent BNA report.  If state programs are forced to overspend on drugs, she explained, people may  start to lose their benefits or eligibility.  The use of brand name drugs instead of generics is thus “an unnecessary cost that could endanger beneficiaries in the [Medicaid] program.”

Massachusetts Medicaid, with a very high (78 percent) generic rate and no patient consent requirement, may illustrate the point, according to Hams, although other strategies were also involved. “A study we commissioned in 2009 found that MassHealth achieved significant savings to curb increasing drug costs by using coordinated policies that increased generic drug use, while putting clinical considerations first.”

Of course, neither PostScript nor the study authors are advocating the use of generic medication for every patient or for the use of generic-only formularies.  A physician should, and can, always mandate the use of a brand name drug if necessary.  (Find out more information on the safety, value, and appropriate use of generic medications at: http://www.genericsarepowerful.org/). We agree with the study authors that a modified generic substitution policy could produce cost savings without compromising quality while leaving room to invest health care dollars more effectively and preserve vital programs.

–Joy Lee, policy intern

For anyone reading pharmaceutical news, this week was All Vytorin, all the time.

For many, the plot is twisted but familiar. Vytorin is a combination drug of Merck’s Zocor (a cholesterol drug in the simvastatin family) and Schering-Plough’s Zetia, an ezetimibe, which was said to clear arterial plaque in a different way than traditional cholesterol-lowering statins. In October 2007, some reporters noticed that the ENHANCE trials wasn’t registered on ClinicalTrials.gov, even though all trials for FDA-approved drugs are required to be registered there before they enroll participants. In November, calls for the ENHANCE results, which had been completed two years earlier, grew louder. Merck and Schering-Plough, which were splitting the spoils, made the unorthodox announcement that they were changing the primary endpoint (what the trial is measuring), and would have results in time for the 2008 annual meeting of the American College of Cardiologists.

And at that ACC meeting this past weekend, an expert panel of five cardiologists finally disrobed the emperor. Even with the changed primary endpoint, Vytorin showed no significant plaque-dissolving benefit over plain ol’ simvistatin. Now it looks as though the drug companies backdated the start date of another Zetia trial, IMPROVE-IT. Emails about suppressed data, vexed researchers, and calls for prescribers to return to older, proven drugs are daily in the news.

Maybe it’s just the times, but we can’t help noticing some similarities between what Forbes.com calls the ‘Vytorin Saga’ and the Bear Stearns bail-out and its myriad financial aftershocks.

Both the Bear and Vytorin nosedives come out of the same economic zeitgeist: in recent years, pharmaceuticals and investment banks have grown profits largely with risky delay tactics – in the case of pharmaceuticals, a cocktail of combo and me-too drugs that magically create new patent exclusivity with the same molecules, and legal battles to keep generics out of the market. In the case of investment banks, those delay tactics included trading on products made up of no-look mortgages given to people without the means to pay. There was time to be bought, and to be sold again at a premium.

As a product, Vytorin is much like a sub-prime mortgage – an unproven way to capture share in a market that had been largely tapped (all the viable mortgage candidates already owned, and were taking out multiple home equity loans to redo their kitchen). With Zocor going off patent, Merck needed a way to keep share in a market that seemed to be expanding infinitely, or at least as far as the shareholders eyes could see. Like homeowners and housing prices, the number of Americans with high cholesterol just kept going up. And up and up. Why not tap into that? Share the profits? The proof – that could come later, once market share was secured. A trial was started, and finished. There was time, certainly time to massage the data – and the start dates, and the end dates, and the primary endpoint. Two years passed, and over $5 billion of Vytorin was sold.

But like Bear’s last few days, Vytorin was brought down when someone finally looked at what was there. “I’m not saying this drug should go away, but it should definitely go to the end of the line,” Dr. Harlan Krumholz told MedPage Today. Dr. Krumholz, a Yale cardiologist, was a member of the panel that spoke on the ENHANCE trial last week. Other prominent cardiologists have called the drug ‘a last resort.’

It’s important to remember that the proof on Vytorin had always been there – or, more accurately, never been there. The key for the subprimes was to buy and sell, but not to ask. The key to Vytorin’s success was, well, not to ask. At least not yet.

But now we are all asking – not just regulators and cardiologists, but homeowners, patients, grocery-shoppers, and members of a public daily medicated but rarely squared with.

Policymakers have begun investigations and hearings. Patients are asking their doctors, and their doctors are retracting their prescribing pens and going back to the basics – in this case, tried-and-true statins. In the contracting financial markets, lending has tightened, and investors are going back to other basics – bonds, banks with demonstrated liquidity. It seems the moment for evidence-based lending and medicine is at hand.

Yesterday, The Boston Globe reported that Fidelity Investments will pay $8 million to settle charges that traders improperly accepted gifts from brokers seeking their business.  The SEC investigation revealed that traders for the Boston-based company received an estimated $1.6 million in gifts (including sports tickets and some very strange bacchanalia involving dwarves) between 2002 and 2004. Some of the 13 traders involved are still under investigation by the SEC, and Fidelity has admitted no wrongdoing in the settlement.

The Globe excerpts several email from brokers who were gifting, including this one to a Fidelity trader in March 2003: “Your prompt response will be rewarded w/ Celtic playoff seats. Thanks for caring.”  According to The Globe, “the SEC said Fidelity traders failed to seek the best stock trades on behalf of its mutual fund customers because their choice of brokers was influenced by gifts.”

Different verse, same refrain.  Gifts influences behavior, whether you’re prescribing Zocor or selling shares of Merck.  And in both cases, the costs of those compromised decisions fall to a party that, well, wasn’t invited to the party…or the Celtics game…or the golf trip.  While the guardians of our health and our finances jockey for favor and market share, it seems we patients and investors are left to pick up the tab, and swallow the pill.

And speaking of gifts…

 A relevant editorial appeared in the Hartford Courant today about the dim prospects for two bills that address the gifts-for-prescribing regulatory waltz industry has been doing around federal anti-kickback rules.  Last year’s bill, which never got voted on, would have required pharmaceutical companies to disclose all gifts to docs and other health care providers or face a hefty fine. This year’s, also DOA, would ban quid pro quos (which the federal anti-kickback statute already does), gifts for physicians personal use, pharma-physician consulting deals without specific deliverables, but would allow small business-use gifts (like post-its) and samples to continue. 

Both bills were proposed by Connecticut AG Richard Blumenthal and supported by the Connecticut Center for Patient Safety.

The Wall Street Journal health blog puts the Courant editorial in the context of several other state and federal bills being considered to rein in the gifting of doctors – including Massachusetts, where Senate President Therese Murray introduced a health care bill this week that would, if passed, become the first complete ban on industry gifts to physicians in the country.