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Greater Use of Generic Drugs Is Saving Millions of Dollars for Blue Cross Blue Shield of Massachusetts and its members

April 4, 2008 — Generic drug use up from 65.8 percent in '06 to 70.6 percent in '07—BCBSMA's generic rate use is among the highest for commercial insurers in the country

Blue Cross Blue Shield of Massachusetts members are finding that generic drugs are safe, have a proven track record and are affordable, and as a result, they are using them more often. The use of generic drugs by BCBSMA members increased from 65.8 percent in 2006 to 70.6 percent in 2007. The BCBSMA 2007 generic utilization rate of 70.6 percent was nearly 7 points higher than the 2007 national figure of 63.7 percent achieved by Express Scripts, Inc., a pharmacy benefit manager with millions of members in Massachusetts, including BCBSMA's customers with a pharmacy benefit.

This nearly 5 percent increase from '06 to '07 is good news for BCBSMA accounts and members. Every one percent increase in the use of generic drugs results in a one percent decrease in the overall cost of prescription drugs. These cost savings translate into lower health insurance premiums for BCBSMA customers. This means health care costs and premiums increase at a lower rate than they would have in the absence of this increased generic drug use.

And members save money directly. Generic drug co-payments save each member $10 to $35 per prescription, depending on benefit plan, with the potential savings of hundreds of dollars per year per member.

"Promoting the use of generic drugs is one of many strategies implemented by BCBSMA to improve the quality and the affordability of health care," said Matthew Connell, Vice President of Pharmacy Services for BCBSMA. "Currently we are at 73.6 percent for our insured, managed care population, and growing every month. With more proven generics entering the market and the success of our pharmacy programs, we anticipate our generic rate will continue to increase several percent per year for the next few years, providing additional savings to our customers."

Before using a generic drug for the first time, members should always consult their physician.

"Using generics can make drugs much more affordable, while preserving the quality of care. This issue warrants attention from all of us -- doctors, patients, and insurers," said Dr. Jerry Avorn, Professor of Medicine at Harvard Medical School and Chief of the Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women's Hospital.

An example to illustrate the impact that switching from a brand name drug when a generic drug option becomes available is the statin drug category. Statins are drugs that help to reduce a patient’s cholesterol level, and are an important part of keeping a member healthy and keeping them out of the hospital. In 2007, more than half of BCBSMA’s members treated for high cholesterol were treated with generic statins, resulting in $27 million in lower costs including $9 million in lower out of pocket copayments for members. All of this was achieved while the number of statin prescriptions increased.

BCBSMA's prescription drugs costs represent approximately 15 percent of total health care costs. This is down from about 20 percent five years ago. With drug price inflation running about 7 percent annually and new higher cost brand drugs coming to the market every year, insurers such as BCBSMA face the challenge of offering a safe, effective and affordable pharmacy benefit. To meet this challenge, BCBSMA promotes greater use of safe and proven generic drugs whenever clinically appropriate and only covers new brand drugs that are safe and provide better clinical outcomes.

Connell said, "When we pay more we want to make sure we are getting more clinical value for our customers. As a result of BCBSMA's pharmacy management programs, our managed care insured pharmacy trend was 4.2 percent in 2007."

Another way BCBSMA is working to provide coverage for drugs that are safe and cost-effective is through the use of e-prescribing. Last month, representatives from the nation's community pharmacies announced that the state of Massachusetts ranked first in the nation for electronic prescribing. The Massachusetts eRx Collaborative, of which BCBSMA is a founding member, was among the Massachusetts organizations recognized for their contribution to the success of e-prescribing.

The eRx Collaborative is a program created to improve the quality and safety of health care in Massachusetts. Since it was launched in 2002, more that 13.5 million prescriptions have been transmitted through the Collaborative. More than 104,000 prescriptions to date were changed as a result of drug safety alerts, a current rate of 8,000 each month. In 2006, BCBSMA providers who used an e-prescribing device chose more cost-effective drugs and saved 5 percent on their drug costs relative to those prescribers who did not use this technology. Of that savings, BCBSMA members saved approximately $800,000 in co-payments associated with their prescriptions.


Blue Cross Blue Shield of Massachusetts ( ) was founded more than 70 years ago by a group of community-minded business leaders. Today, headquartered in Boston, BCBSMA provides coverage to more than 3 million members, 2.5 million in Massachusetts. BCBSMA believes in rewarding doctors and hospitals for delivering safe and effective care, and in empowering patients to take more responsibility, become educated health care consumers and become stronger partners with their doctors. Blue Cross Blue Shield of Massachusetts is an independent licensee of the Blue Cross Blue Shield Association.


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