From: Reuters
Published February 29, 2008 12:26 AM

Generics damp 2007 drug costs: Express Scripts

By Lewis Krauskopf

NEW YORK (Reuters) - Use of less-expensive generic medicines for high cholesterol and other conditions slowed growth of U.S. prescription drug costs last year to its lowest level since at least 1996, pharmacy benefit manager Express Scripts Inc said on Friday.

Total spending on prescription drugs in 2007 grew 4.7 percent, according to Express Scripts, one of the largest U.S. managers of prescription benefits.

But the average price of a generic drug -- which are copies of brand-name medicines that have lost patent protection -- fell 3.1 percent last year.

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That compared with a 7.4 percent increase in the average price of a brand-name drug, according to data Express Scripts compiled from a random sampling of 3 million of its members.

Meanwhile, generics amounted to 63.7 percent of prescriptions as of the end of last year, compared with 59.7 percent a year ago.

"You hear nothing but bad news about healthcare expenses going up. This is the lowest this has been in 12 years that we've tracked this," said Steve Miller, chief medical officer for Express Scripts. "Greater use of generics is clearly the single most important aspect of why it's coming down."

Some of the biggest-selling drugs in the world have seen their patents lapse and become available as generics in recent years, including Merck & Co's cholesterol treatment Zocor, as well as the Norvasc blood-pressure drug and Zoloft antidepressant, both sold as brands by Pfizer Inc.

In addition to being cost savers for consumers, generic drugs also are a boon to the bottom lines of Express Scripts and other benefit managers that can leverage large discounts on generics to sell through their mail-order pharmacies.

Overall last year, the average price of a prescription rose 2 percent to $54.34, according to the study.

One major area for savings was in the category of cholesterol-lowering medicines, one of the world's biggest-selling therapy groups. Last year marked the first full year for sales of generic versions of Zocor and Bristol-Myers Squibb's Pravachol.

Spending on cholesterol-lowering drugs fell 9 percent in 2007, as the average price of such medicines dropped 15.5 percent to $67.32 per prescription.

Express Scripts credited a type of program that requires patients to use a generic before trying a brand as being particularly effective at controlling drug spending.

Employers and health plans which used these programs cut spending for cholesterol-lowering drugs by 13 percent compared with 4 percent that did not use the program. For insomnia medicines, those using such a generics program cut spending by 17 percent against 4 percent for those that did not use the program.

(Editing by Tim Dobbyn)

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