Pharmaceutical products fall into two categories: First, there are brand products for which there are no generic alternatives (single-source products). These products tend to be the newest to market and, because they are (rightfully) protected from direct competition, the most expensive. In many instances they are superior to older products. Second, there are products for which both brands and generics are available (multi-source products). These products are generally older than the first group, as the brands’ monopoly protection has expired, but in general the brand version is priced higher than the generic version.
Alex Brill, a research fellow at the American Enterprise Institute, did a study cost-efficiency in the Medicaid program related to the second type of product—brand and generic versions of the same drug. By examining Centers for Medicare and Medicaid data for 45 states across four quarters, I found roughly 3.5 million instances where a Medicaid patient took a brand version of one of the 20 multi-source products. I estimate that if the lower-cost product had been used instead, the Medicaid program would have saved $329 million in 2009.
Grace-Marie Turner, founder of the Galen Institute, wrote a nationally syndicated opinion stating that Brill’s study supports saving money by pushing Medicaid patients onto older generic drugs instead of giving them newer, better drugs that are only available as costly brand name products.
Brill’s study and Turner’s comments bring up a valid question about the value of brand name vs generic drugs. What do you think? Are name brand medications any better than generics?”
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Filed under: healthcare reform, Patient Safety
