Non-Generic Drugs Increase Medicaid Costs

A new study by the American Enterprise Institute found that using brand-name drugs instead of generics may have added as much as $329 million in extra spending in 2009.  

The Hill: Report: Medicaid Wasting Money On Non-Generics
States and the federal government could have saved as much as $329 million in 2009 if they'd more often paid for generic drugs for Medicaid beneficiaries, according to a new report by Alex Brill of the conservative American Enterprise Institute. The report found that Medicaid paid about $1.5 billion for 20 popular drugs that have generic equivalents - overpaying by about 20 percent over the $1.17 billion of their generic equivalents. The report adds that, with health care reform adding 16 million people to Medicaid and many drugs losing patent protection, the potential for savings is greater than ever (Pecquet, 3/28).

Bloomberg: Buying Brand-Name Drugs Over Generics Raises Medicaid Costs
Medicaid, the joint U.S.-state health program for the poor, spent $329 million extra in 2009 purchasing 20 brand-name drugs instead of available generic copies, according to an American Enterprise Institute report. The study included contraceptives, respiratory medicines and antibiotics. Risperdal, New Brunswick, New Jersey-based Johnson & Johnson's antipsychotic, prescribed in generic form exclusively would have saved $60 million in 2009, the report released today found. Teva Pharmaceutical Industries Ltd., based in Petah Tikva, Israel, and Canonsburg, Pennsylvania-based Mylan Inc. make generic versions of the drug. "There's $300 million-plus in money that's being left on the table in the Medicaid program at a time when we can't afford" it, Alex Brill, the study's author, said in a telephone interview (Armstong and Edney, 3/28).

This is part of Kaiser Health News' Daily Report - a summary of health policy coverage from major news organizations. The full summary of the day's news can be found here and you can sign up for e-mail subscriptions to the Daily Report here. In addition, our staff of reporters and correspondents file original stories each day, which you can find on our home page.