Generics offer savings in long run

September 1, 2006

National Reports-As major brand drugs such as Zocor (Merck) and Zoloft (Pfizer) lose patent protection and become available as generics, health plans, employers and patients alike can expect to realize significant savings in the long run, experts say.

NATIONAL REPORTS-As major brand drugs such as Zocor (Merck) and Zoloft (Pfizer) lose patent protection and become available as generics, health plans, employers and patients alike can expect to realize significant savings in the long run, experts say.

"However, in the short term, many of these generic products will first hit the market with a six-month exclusivity period during which time generic products are typically priced about 30% below the branded product," says Ruth Ann C. Opdycke, PharmD, MS, senior consultant with The Pharmacy Group LLC. "Depending on the brand and generic copayment differential, health plans and employers might end up picking up a larger share of the cost of the generic product during the exclusivity period," Opdycke says.

However, generic prices will fall rapidly once the six-month exclusivity expires and other generic manufacturers are permitted to manufacture the generic product, she says. "With market competition of multiple generic manufacturers, the price of a generic product typically can be priced at a 60% discount to the branded generics," Opdycke adds.

Elise Anderson, a spokesperson for Blue Shield of California, told Managed Healthcare Executive that Blue Shield confirms the WSJ report and that "Blue Shield considers the contract arrangements that it maintains with other companies to be confidential, which is the reason that we are unable to respond to...additional questions."

Papazian says that it is its standing policy not to discuss specifics of any of Merck's commercial relationships. "And for proprietary reasons, we cannot discuss our pricing strategy," she says.

Says Opdycke: "This is a 'first-of-its-kind' design and is contrary to the broad push to increase generic utilization in general throughout the managed care industry."