AUSTIN, Texas—A new Texas generic drug law could potentially save patients and drug benefit programs as much as $257 million a year, say University of Texas at Austin researchers who have spent years studying the economic impact of increasing generic substitutions.
Under the new law, which went into effect June 1 and is expected to increase the use of generics, physicians must take the extra step of writing the words “brand necessary” or “brand medically necessary” when prescribing a substitutable brand-name drug. Otherwise, the pharmacist can substitute a generic drug with a patient’s permission.
A 2001 study conducted by researchers in the university’s Center for Pharmacoeconomic Studies estimated that consumers in Texas paid an additional $223 million in 2000 for brand-name products that could have been substituted with an appropriate generic alternative. Dr. Michael Johnsrud, a researcher at the center in the College of Pharmacy, has updated those figures and says Texans could have saved $257 million or 2.3 percent of total prescription spending by using more generic drugs in 2001.
Prior to the new law, there were two signature lines on a prescription pad in Texas. Under one line there was a statement that read “Dispense as Written” and, under the other line, a statement “Product Selection Permitted.” When doctors signed the “Dispense as Written” line, the patient could not receive the generic equivalent of the name brand drug that was written. If the doctor signed the “Product Selection Permitted” line, the patient was allowed to get the generically equivalent product (at a lower cost).
“With the new rule change, there now is only one signature line, and if the doctor does not want the generic drug dispensed, the doctor must manually write “brand medically necessary” on the prescription,” Johnsrud said. Physicians prescribing for Texas Medicaid clients have had this requirement for years.
“Now, physicians have to be more deliberate in requiring that the substitutable brand-name drug be dispensed,” he said. “This may change some physicians’ behavior who typically sign the ‘Dispense as Written’ line, regardless of the drug being prescribed.”
Based on Johnsrud’s estimates, 7 percent of all prescriptions in Texas are dispensed with a brand-name drug that has lost its patent protection, when a less expensive Federal Drug Administration (FDA) approved generic alternative could have been dispensed.
The Center for Pharmacoeconomic Studies, which conducts economic and policy research on the impact of pharmaceutical services and products, was established in 1994 in response to the growing concern about the costs of prescription drugs.
“This change will have a larger impact in the near future because 20 top-selling branded pharmaceutical products, including Claritin®, Cipro®, Augmentin®, Zocor® and Pravachol®, will lose their patent protection over the next three years,” said Dr. Marv. Shepherd, director of the center.
Studies show that expenditures on prescription drugs have been increasing at 17 to 18 percent a year — to $154.5 billion in 2001 — over the last five years.
“This is driven mostly by more drugs being dispensed and more newer drugs being prescribed by physicians,” Johnsrud said.
It is important to note that the new law affects only brand-name drugs that have lost their patent protection, he added.
“For the newer drugs that still have patent protection (Celebrex®, Lipitor®, for example) there is not a generically equivalent agent available yet,” Johnsrud said. “So, these drugs are not affected by the rule change.”
The new rule does not mean that a pharmacist is allowed to substitute any generic drug for the brand-name drug that is prescribed. The only substitution that can be made is for the exact, FDA approved generic equivalent.
For further information contact: Nancy Neff, 512-471-3151.