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Managing Medicare's Costs

Controlling drug costs: discovering substitutes for brand-name drugs (3 of 3)

Pharmaceutical manufacturers spend more each year for advertising than they do for the research and development of new drugs. And the amounts they spend are substantial. According to a Kaiser Family Foundation 2010 study (page 4), drug companies spent $10.9 billion on advertising in 2009, with their costs of direct-to-consumer advertising having more than doubled since 1999.

Creating television ads for a prescription drug begins with a careful and sometimes lengthy process. The initial phases of ad creation rely heavily on consultants and focus groups to design and pre-test each ad.

But once an ad is televised, it starts to generate revenue quickly, unlike R&D expenditures whose returns are in the distant future. Because the ads generate immediate responses and purchases, drug manufacturers can fairly quickly gauge the success of individual ads. By using this information as well as feedback from additional focus groups, they are able to modify the ads to enhance their appeal, in many cases creating separate versions of each ad for specific demographic groups.

Consumers are susceptible to this sophisticated marketing, and they often respond by asking their doctors to prescribe an advertised drug. For retirees viewing these ads in their living rooms, the tendency to ask physicians for certain prescriptions is strong. The reason is that the drugs most frequently advertised on television are to treat conditions common among older people — arthritis, pain, osteoporosis, acid reflux, high cholesterol, and depression. Consequently the ads have a receptive audience among Medicare enrollees.

One 2008 analysis (page 8) found that doctors complied 39% of the time when their patients requested a prescription drug they’d seen advertised. In a more recent Consumer Reports survey, 20% of the respondents said they had asked their physicians to prescribe drugs that they’d seen advertised, and that the physicians had prescribed the requested drugs 59% of the time.

Retirees should be cautious in asking their doctors to prescribe drugs simply because they’ve seen a persuasive advertisement, perhaps one that includes phrases such as “proved effective in clinical trials,” or “nine out of ten doctors recommend this drug.” The claim that a drug has been proved effective is meaningless, since the FDA does not permit the sale of drugs unless they have succeeded in clinical trials.

And even if nine out of ten doctors may recommend a drug, it’s not necessarily the only drug they recommend for a specific medical condition. Physicians often have several drugs they prescribe for particular conditions, and they choose the one that best matches the patient’s medical needs. It is not unusual, for example, for physicians to prescribe different blood pressure medications for different patients.

Asking a physician to prescribe an advertised brand-name drug can also be hazardous to retirees’ pocketbooks. In many cases there are equally effective and less costly substitute drugs. The Food and Drug Administration classifies these substitutes, which are usually generic drugs, as therapeutically alternative drugs. Celebrex, for instance, is a broadly advertised brand-name drug for arthritis and pain relief. Ibuprofen, on the other hand, is a much less expensive substitute drug that meets the FDA’s definition of a therapeutic alternative.

Five months ago Consumer Reports launched its free Best Buys Drugs website. Written in non-technical language, this site enables people to compare drugs for effectiveness, safety and price. They can look up a specific drug to see if there’s a lower-cost substitute availale. Or they can view a list of the most commonly prescribed drugs for a medical condition, e.g., diabetes or insomnia.

To look up a specific drug, after going to the Best Buy home page people can click on the link “See Reports by Drug,” which brings up a list of commonly prescribed drugs. Then after selecting the drug they want to read about, they are taken to a page that describes the drug and that lists “Best Buy” drugs in the same category. And by clicking on the “Compare Drugs” tab, people can see any available substitute drugs as well as their costs.

A prescription drug earns Consumer Reports’ Best Buy designation if it costs less and is considered at least as effective and safe as other medications in its class. The research underlying the Best Buy designations are from the Drug Effectiveness Review Project at Oregon Health & Science University, which evaluated hundreds of studies of drug effectiveness.

Consumer Reports magazine described the new site in its March 2011 issue and included some examples of widely prescribed brand-name drugs for which there are equally effective and less expensive choices. Celebrex (or celecoxib), for example, has a retail cost of $139 a month for a 30-day supply of 200 mg pills. CR’s Best Buy drugs in Celebrex’s category are the substantially cheaper ibuprofen and naproxen, available over-the-counter for $4 a month.

Similarly, people with allergies can pay $72 a month for Astepro or $4 a month for Loratadine, which CR rates as an equally effective substitute drug. And for heartburn, Consumer Reports says that people can save $184 a month by substituting equally effective omeprazole for Nexium.

Retirees with Part D coverage will usually save less than the difference in the retail price, since their insurance picks up part of the tab. But the savings are likely to recur year after year, since almost all advertised drugs are maintenance (as opposed to one-time) medications. Thus a retiree who saves even a couple of hundred dollars a year by switching to a substitute will over time save much greater amounts.

As an added benefit, people who take less expensive generic drugs are more likely to adhere to their medications, as one large 2006 study demonstrated. That makes sense, given that many people stop taking their drugs when they feel that they can no longer afford them.

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