Oklahoma Health Care Authority: Generic Drugs Hold Down Costs

Article excerpt

At a time when the cost of brand-name drugs is skyrocketing and enrollment in the state's Medicaid program is growing, the Oklahoma Health Care Authority has managed to hold the line on its costs.

A significant use of generic drugs, along with policies like prior authorization and quantity limits, have made a difference in the last decade, said Nancy Nesser, pharmacy director for the OHCA, which administers the state's Medicaid program.

Per member, per month pharmacy costs were $39 in fiscal year 2001, compared to $44 in fiscal year 2010. The OHCA saw $375 million in pharmacy expenditures for fiscal year 2010, compared to $204 million in 2001, when monthly eligible users grew from 280,000 to 680,000 during the same time frame.

"We're at least holding the line and maybe we're starting to tilt the trend where we can really see that our policies are working," Nesser said. "Without any reports of any bad outcomes, it leads us to believe the policies are not only working, but they're correct. We've been able to balance the need and the correct therapy for any individual member."

Nesser said Oklahoma is in the top five states for use of generic drugs. In fiscal year 2001, the OHCA had a 48-percent generic drug use. For fiscal year 2011, it's 77 percent, and the level is expected to reach 83 percent for fiscal year 2011.

Meanwhile, the cost of brand-name drugs has grown exponentially - a total of 80 percent from 2005 to 2011, Nesser said. The cost especially jumps as the patent nears its end, she said. For example, the blood thinner Plavix, for which the patent expires in November, has risen 32 percent in cost since September 2008, she said.

But so has the number of generic drugs risen. Many statins for high cholesterol have turned generic, as well as antidepressants, Nesser said. The patents for five major brand-name drugs are ending within the next year, which will provide another boost to the OHCA. Last fiscal year, the agency spent $40 million on those five: Lipitor (a statin), Singulair (for allergies and asthma), Plavix (blood thinner) and Seroquel and Zyprexa, both antipsychotics.

"That's a category (antipsychotics) that we spend a lot of money on," she said. "That's probably the top spending. So when their patents expire, that will be huge for us."

The federal drug rebate program affects every Medicaid agency the same. The program guarantees the Medicaid agency gets the best price from the manufacturer or a minimum discount, which is now 23 percent. For fiscal year 2010, the OHCA collected $131 million through the rebate.

But the OHCA has several tools it uses to further control costs and ensure proper use of drugs. For each member, the OHCA pays for six prescriptions per month with a limit of two brand names, Nesser said. …