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Four of the largest health plans in California this week plan to launch a financial incentive program to prompt members to use lower-cost generic prescription drugs rather than brand-name medications to treat arthritis, depression, high blood pressure, and other chronic medical conditions, the Los Angeles Times reports. Under the program, called “Generic Advantage,” the health plans — Blue Cross of California, Blue Shield of California, Health Net of California, and PacifiCare Health Systems — will offer members a coupon for a one-time discount of as much as $10 on the cost of copayments for certain generic medications; member copays for generic treatments are $10 or less in most cases (Levin, Los Angeles Times, 9/15).

The health plans, which collectively provide health coverage for more than 14 million California residents, will distribute the coupons to about 15,000 physicians statewide to attach to their new prescriptions, when appropriate, for a generic medication included in the program (Rundle, Wall Street Journal, 9/15).

The program, which will cost about $250,000, could save members hundreds of dollars per year in copays and reduce prescription drug costs for the health plans. A 1% increase in member use of generic medications would reduce annual prescription drug costs by about $5 million for Health Net, $6 million for Blue Shield and $4.5 million for PacifiCare, officials for the health plans said. “This could add up to significant savings … which is important because of pharmacy cost inflation being so outrageously high,” Dr. Sam Ho, chief medical officer for PacifiCare, said (Los Angeles Times, 9/15).


Supporters said that the program would help counter the effects of advertisements for brand-name prescription drugs. “Doctors are getting barraged by pharmaceutical companies to sell the drugs that make the most money,” Peter Lee, president of the Pacific Business Group on Health, a not-for-profit employer group, said (Wall Street Journal, 9/15).

Uwe Reinhardt, a professor of health economics at Princeton University, also praised the program. “I think ultimately it just has to go this way — that patients get more engaged in thinking” about the cost of prescription drugs that they use, he said.

Jamie Court, executive director of the Santa Monica, Calif.-based consumer advocacy group Foundation for Taxpayer and Consumer Rights, added, “I think it’s an interesting program because it is a way of trying to combat the influence of pharmaceutical marketers on doctors.”

The Pharmaceutical Research and Manufacturers of America did not comment on the program (Los Angeles Times, 9/15).

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