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The Honolulu Advertiser
Posted on: Monday, November 29, 2004

Generic drug sales on the rise

By Catherine E. Toth
Advertiser Staff Writer

After an aggressive ad campaign promoting generic drugs, Hawaii Medical Service Association has seen an increase in sales of generic versions of prescription medications, resulting in millions of dollars in savings.

Nearly half of all prescriptions issued in Hawai'i are for generic drugs now, compared to about 30 percent five years ago, HMSA reported.

"That's very good," said Dr. Richard Chung, vice president and medical director for care management at HMSA. "We feel really good about that."

And with the rising cost of prescription drugs — estimated to be at 18 percent a year — Hawai'i consumers are more encouraged to opt for less-expensive versions.

Generic drugs, on average, cost about a third less than brand-name medications. Some brand-name prescription drugs such

as antibiotics can cost between $10 and $20 per pill, said clinical pharmacist Wendell Oumaye. Generic versions can cost as little as 10 to 15 cents per pill and still be as effective.

Last year healthcare spending in the United States reached $1.7 trillion, according to the Centers for Medicare and Medicaid Services. That translates to more than $5,800 per person.

Drugs costs nationwide are rising 18 percent a year, to $212 billion in 2003 — double the amount spend in 1999.

Hawai'i is no exception.

Last year, HMSA's 680,000 members used $277 million in prescription drug benefits. That was a 69 percent increase from $164 million used in 1999.

This is a trend that HMSA expects to continue, as more baby boomers age, new drugs hit the market and obesity remains a nationwide problem.

"New drugs tend to be more expensive and the growing number of people using these drugs contribute to the total cost," Chung said.

For example, as baby boomers — the largest sector of the U.S. population — age, they may require medications for diseases and illnesses such as hypertension and diabetes affiliated with their senior years, Chung said.

"So even though (the medication) may be cheaper per pill because of generics, you have twice the number of people using them," he said.

The rising costs and need for prescription drugs have also spurred concern in the medical community about the need to educate consumers about ways to stave off preventable diseases and illnesses such as those associated with obesity, he added.

A large contributor to rising healthcare costs is the high cost of prescription drugs, which has prompted HMSA to promote their generic versions.

On average, every HMSA member fills about 10 prescriptions a year. That has gone up in the past five years, Chung said.

"Brand-name drugs, for various reasons, carry with it reputation," Chung said. "Most people will buy the well-known brand instead of the store brand even though it's the same."

"Choose Generic," HMSA's public campaign to promote generic drugs features print and TV ads, direct mailing and incentive programs for doctors.

This campaign is up against some tough competition for consumers' attention.

Drugmakers will spend about $3 billion this year advertising their new drugs in direct-to-consumer campaigns, according to IMS Health, a pharmaceutical research company.

The frenzy of ads, which began in 1997 after the Federal Drug Administration lifted restrictions on television and radio advertising of prescription drugs, spurred a similar frenzy of consumers requesting these name-brand drugs for their ailments, real or imagined.

From 1993 to 2003, the number of prescriptions issued nationally rose from 2 billion to 3.4 billion — a 70 percent increase — according to the Henry J. Kaiser Family Foundation.

"The marketing has increased the use," Chung said, "so it's been very effective."

He said doctors complain about patients demanding prescriptions for a specific drug they've seen on TV, even though they don't need it.

HMSA was motivated to encourage the use of generic drugs because of the cost to healthcare insurers, employers and consumers for pricey brand-name drugs.

"If we can use less costly but the most effective drug as much as possible, we can at least try to keep the rising rate of healthcare and medications reasonably close to the normal rate of inflation," Chung said. "If we're not helpful in keeping (costs) under control, the employers will pay for it."

Should the cost of prescription drugs continue to plague employers, they may opt not to offer prescription drug coverage to their employees. And that, Chung said, is be a huge concern.

Under the state's Prepaid Health Care Act, which requires health insurance coverage for those working at least 20 hours a week, employers are not required to provide prescription drugs coverage. Drug benefits are optional, as are vision and dental coverage. Most employers, however, cover drug prescriptions.

"Because prescription drugs (are) not a required benefit, some employers might consider severely restricting medications or not providing it at all," Chung said. "And then we're really in trouble. We know medications prevent hospitalization and serious illnesses. Treating that is much more expensive. Then we'll pay for that anyway."

Reach Catherine E. Toth at 535-8103 or ctoth@honoluluadvertiser.com.