Prescription medicines are costly and a significant source of concern for insurance companies administering workers’ compensation and automobile no-fault claims. Within the healthcare and insurance industries there exists some debate concerning the substitution of generic for dispense as written drugs (DAW) orders for specific brand name drugs.
According to The Washington Post, non-generic prescription drugs cost nearly eight billion dollars per year yet generic drugs account for approximately 70 percent of total prescriptions. In an article citing the Congressional Budget Office, the Washington Post reports that generic drugs prescribed under Medicare Part D accounted for $33 billion dollars in savings on prescriptions. Furthermore, a separate study conducted by IMS Health and cited in the same article showed that nearly $149 billion dollars was saved across the nation’s health care system in the year 2009 due to the use of generic prescriptions.
Additional research published in The American Journal of Medicine and summarized by The Washington Post centered on a one-month long observation of approximately two million people taking more than five and a half million prescription medicines. A small percentage of these prescriptions were DAW for specific brand name drugs; the study estimated over $1.7 million dollars of missed savings for the patient participants because generic drugs had not been prescribed instead. The health insurance companies involved could have saved well over $10 million dollars if generic prescriptions had been dispensed.
Some states address this cost issue by requiring the substitution of generic drugs for name-brand drugs automatically while other states do not. Additionally, a few states mandate that doctors must explain why they are prescribing a name-brand drug as DAW. This extra step may result in cost savings, but it is generally up to each state to determine how to handle dispense as written drugs.
With potential costs in the millions of dollars, insurance companies will need to begin being proactive in their management of expenses for claims involving prescription drugs. The most effective way to begin this process is for an insurance company to work with a pharmacy benefit manager (PBM) such as Northwood. As an experienced PBM in Michigan, Northwood has proven systems in place to assist with controlling workers’ compensation and auto no-fault claims costs.
A credentialed network of pharmaceutical providers spanning the United States and Puerto Rico ensures claimants receive access to their prescriptions. Additionally, Northwood implements a pre-authorization process on all claims to ensure each prescription is injury related. This process also allows Northwood’s highly trained staff to determine whether a generic drug is suitable for the claimant or if a prescription must be a DAW specific brand name drug. Once the pre-authorization process is complete the claimant may pick up his or her prescription and pay no out-of-pocket costs.
The potential for unnecessarily increased costs due to the higher cost of dispense as written drugs is something an insurance company can easily control through a partnership with Northwood. For additional information please contact a representative.
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