Challenge:
Overuse of brand medications
How We Help:
Visual analysis to help plan sponsor understand cost impact PBM proposals are often evaluated based on their ability to contract brand discounts and manufacturer rebates. Most experienced pharmacy benefit managers realize that generic drugs offer a significant opportunity for savings and rebate strategies, which can conflict with lowest net cost. The fact of the matter is both strategies have merit. Depending on agreement or actuarial data used for full AWPs, both brand and generic and generic substitution rates, the following analysis depicts two times the savings for a 1% increase in generic utilization compared to a 1% discount in branded drugs.
To understand the math, please refer to the image.
Total Cost Savings from 1% increase in DR is twice that of just under 1% increase in brand discount.
End Result:
Increased GDR (generic drug utilization) by 10%
