Pharmacy Update: March 2012

Over the past several years, prescription drug costs in workers’ compensation claims have risen dramatically, making it increasingly more important for claims professionals to carefully evaluate this exposure and mitigate costs when possible. PMSI understands that keeping up to date on new generic formulations is part of an overall strategic approach to reduce the cost of claims in addition to the potential for an overall better therapeutic response for the injured worker.

Every brand medication has a patent life that will ultimately expire. Once the patent expires, generic equivalents will become available to the market at a lower cost. Although there is no set brand-versus-generic price differential upon generic entry, PMSI’s recognized clinical analysis shows that on average the generic has a 10% lower price at time of launch over its brand counterpart.

There have been several brand name drugs, commonly prescribed in workers’ compensation claims, which have recently had their patents expire with generic equivalents approved by the FDA for introduction to the market. All of these generic equivalents will have some impact on prescription costs within the industry (including prescription drug allocations in MSAs), although some to a greater degree than others.

In the area of pain management, the patent for Kadian expired in the third quarter of 2011, as noted in the March PMSInfo Clinical Services Newsletter. Generic Kadian (Morphine Sulfate CER) was approved by the FDA in November of 2011, but was just released by its manufacturers for shipment in early 2012. Morphine Sulfate CER is indicated for the treatment of moderate to severe pain that requires around-the-clock analgesia and is available in multiple strengths ranging from 20mg to 100mg. The price differential for brand versus generic ranges from .82 to $5.92 per capsule depending on the strength prescribed. According to PMSI’s Drug Trends Report, Kadian was listed in the Top 20 Brand Medications by Total Transactions for Workers’ Compensation, so the generic equivalent is expected to have a significant impact on reducing prescription costs within the industry.

In early 2012, several brand name psychiatric medications, such as Lexapro, Geodon, and Zyprexa had their patents expire with generic equivalents approved by the FDA. Psychiatric medications such as these are another highly prescribed classification of drugs in workers’ compensation claims.

Generic Lexapro (Escitalopram Oxolate) is an SSRI indicated for the treatment of depression and GAD. Before the generic version was released in Feb. 2012, Lexapro was also listed in the Top 20 Brand Medications by Total Transactions for Workers’ Compensation; therefore, its generic equivalent will likely have the greatest impact on cost containment. It is anticipated that the generic formulation will gain popularity due to the savings which can be realized.

Generic Geodon (Ziprasidone) (approved for the treatment of Bipolar I disorder, acute mania, and schizophrenia) as well as generic Zyprexa (Olanzapine) (approved for the treatment of acute psychosis/mania, Bipolar I disorder, schizophrenia and resistant depression in combination with Prozac) are both commonly prescribed for their off-label use in treating depression. The generic versions of these medications will offer a savings of 10 to 11% per unit over their brand counterparts.

As 2012 progresses, PMSI will continue to keep the industry informed of prescription drug updates and changes which will have an effect on prescription drug costs and MSA allocations.

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