As healthcare costs continue to rise, employers are constantly looking for ways to save money while still providing quality benefits to their employees. One solution that is often overlooked is the use of generic alternatives for brand-name drugs. While not every brand-name drug has a generic alternative available, employers can work with their pharmacy benefit manager (PBM) to create a formulary that prioritizes generics. This not only benefits the employer’s bottom line, but also has a positive impact on the health and well-being of their employees.

First, let’s define what a generic drug is. A generic drug is a medication that is manufactured to be the same as a brand-name drug in dosage, safety, strength, route of administration, quality, performance characteristics, and intended use. The main difference between a generic and brand-name drug is the price. Generic drugs are typically much cheaper than their brand-name counterparts. This is because brand-name drugs are usually developed by a pharmaceutical company and have a patent, which allows them to be the only manufacturer of that drug for a certain period of time. Once the patent expires, other companies are able to produce generic versions of the drug, which drives down the price.

So why should employers prioritize generics in their formulary? The answer is simple – cost savings. Generic drugs can save employers, and their employees, a significant amount of money. According to a report by the Association for Accessible Medicines, generic drugs saved the U.S. healthcare system $293 billion in 2018 alone. This not only benefits employers, but also employees who may have to pay a portion of their medication costs through copays or coinsurance.

But cost savings are not the only benefit of prioritizing generics. Generic drugs have been proven to be just as safe and effective as their brand-name counterparts. The Food and Drug Administration (FDA) requires that generic drugs have the same active ingredients, strength, dosage form, and route of administration as their brand-name counterparts. This means that employees can still receive the same benefits from their medication while saving money.

Another benefit of prioritizing generics is the impact it can have on employee health. By making generic drugs more accessible, employees are more likely to adhere to their medication regimen, which can lead to better health outcomes. A study by the National Center for Biotechnology Information found that patients were more likely to take their medication as prescribed when they were given a generic version of their brand-name drug. This can lead to better management of chronic conditions and a decrease in overall healthcare costs.

Creating a formulary that prioritizes generics also aligns with the trend towards value-based care. Value-based care focuses on providing quality care at a lower cost. By prioritizing generics, employers are not only saving money, but also promoting the use of cost-effective treatments that can lead to better health outcomes for their employees.

Now you may be wondering, what if there is no generic alternative available for a certain brand-name drug? In this case, employers can work with their PBM to negotiate lower prices for the brand-name drug. PBMs have relationships with pharmaceutical companies and can use their negotiating power to secure lower prices for their clients. This ensures that employers are still getting the best deal for their employees.

In conclusion, while generic alternatives may not be available for every brand-name drug, employers can still prioritize generics in their formulary to save money and promote better health outcomes for their employees. By working with their PBM, employers can negotiate lower prices for brand-name drugs, and in turn, provide cost-effective and quality care for their employees. It’s a win-win situation for both employers and employees. So, let’s make the switch to generics and reap the benefits together.