Study: Expanding Generic Drug Use Could Save Billions

The suggestion goes beyond the common practice of substituting a generic drug for a brand-name drug with the identical active ingredient. The researchers say that in many instances, a generic with a different chemical makeup, prescribed for the same disease, could work just as well. This is called therapeutic substitution.

For example, a brand-name proton pump inhibitor, used to reduce acid reflux, could be replaced with a generic proton pump inhibitor with a different active ingredient. In many cases, the benefits would be the same. To pay more for the same benefit is just excess spending, the researchers say.

Excess spending of $73 billion took place between 2010 and 2012, the study concluded. Researchers examined prescription data on 107,123 patients, using the Medical Expenditure Panel Survey from the Department of Health and Human Services.

Of the total excess spending during that period, patients paid 33 percent, or $24.6 billion, out of pocket.

The study was published in JAMA Internal Medicine. It was authored by Michael E. Johansen, M.D., of The Ohio State University in Columbus; and Caroline Richardson, M.D., of the University of Michigan, Ann Arbor. It can be found at

The most excess money was spent on statins to lower cholesterol, with an excess expenditure of $10.9 billion; and atypical antipsychotics for mental disorders, with a $9.9 billion excess. Proton pump inhibitors to reduce stomach acid incurred an extra expense of $6.12 billion; and selective serotonin reuptake inhibitors, for depression, $6.08 billion.

“A previous study showed substantial potential savings if therapeutic substitution were introduced to Medicare Part D,” the authors stated. “In addition, a nationally representative study showed high levels of branded proton pump inhibitor (PPI) use and expenditure between 2007 and 2011 when a therapeutically equivalent generic medication was available.”

Certain classes of drugs were omitted from the analysis, including some antibiotics and respiratory drugs and testosterone. Insulin was also omitted, because no generic form is available.

The study’s cost savings estimates are correct, said Jonathan Watanabe, an assistant professor in the Skaggs School of Pharmacy and Pharmaceutical Sciences at UC San Diego. Watanabe wrote his doctor of pharmacy thesis on the subject.

“It’s been demonstrated in several studies that there’s a lot of money being left on the table, because we’re not using generics as effectively as we could be,” Watanabe said.

Substitution may actually improve patient health, Watanabe said. Those who have trouble affording expensive brand-name drugs are apt to fall out of compliance, losing all benefit from the drug they never take. And that may mean greater expenses down the road, if patients are hospitalized for a condition that faithful adherence to their medications could have averted.

“If we could keep them more adherent, we could reduce health system costs,” he said.

Putting therapeutic substitution into practice will require better communication between doctors and pharmacists, and systems they use need to be redesigned, said author Johansen.

“The health care systems, the medical records systems, should be more aligned toward getting the easiest, cheapest, best drug into the patient’s hands,” Johansen said.

To do that, spreading the knowledge that pharmacists have is essential, he said.

“The pharmacists have information that I don’t have,” Johansen said. “For instance, what is the cheapest available drug? Not just by brand name, but what is the cheapest available drug for the patient.”

Substituting a lower-priced generic for a more expensive brand name drug is now widely accepted. In the great majority of cases, the drugs work the same. But therapeutic substitution brings in potential dangers such as harmful interactions with other drugs the patients may be taking.

In addition, laws would have to be changed to make therapeutic substitution legal.

Pharmacists can fill a prescription with a generic version of a drug, even if the prescription specifies the name brand. But all states allow physicians to overrule this discretion by indicating that the prescription must be dispensed as written.

Generally, pharmacists don’t have the authority to substitute another drug in the same class, even if it’s intended for the same ailment. In most states, physician approval is needed.

Acceptance of therapeutic substitution is beginning to grow, Watanabe said. Washington State’s government-run health care system has adopted what it calls a therapeutic interchange program, which Watanabe helped design.

And Kaiser Permanente has achieved the same result by using its list of approved drugs, or formulary, he said.


In an accompanying editor’s note, Joseph Ross, M.D., said therapeutic substitution should be instituted by collaboration between physicians and pharmacists to ensure quality of care isn’t harmed.

“Medications within a class are not necessarily equally effective and may have slightly different potencies and safety profiles,” Ross wrote.

“For example, the efficacies of the different selective serotonin reuptake inhibitors for the initial treatment of depression are similar, but the adverse effect profiles differ substantially, with the result that within class substitutions may not be appropriate. On the other hand, drug companies often market their new brand-name medications as having special benefits over existing competitors, even when these benefits have not been substantiated in randomized clinical trials.”

Drug company payments are linked to the frequency with which doctors prescribe brand name statins, according to an accompanying JAMA Internal Medicine study. The study, which does not prove cause and effect, examined the relationship between payments to Massachusetts doctors and their rate of prescribing branded statins.

For physicians with no industry payments listed, the median brand-name statin prescribing rate was 17.8 percent, the study found. For every $1,000 in total payments received, the brand-name statin prescribing rate increased by 0.1 percent.

“As the United States seeks to rein in the costs of prescription drugs and make them less expensive for patients, our findings are concerning,” the study said.

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