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3 Words Could Increase Drug Costs By $1.2B Annually

Margaret Dick Tocknell, for HealthLeaders Media, April 6, 2011

Arizona governor Jan Brewer has generated a lot of press lately and a lot of jokes with her proposal to require some of the state's Medicaid members pay an annual $50 fine for engaging in certain unhealthy behaviors like being obese and smoking.

Google "Arizona + obesity" and more than 6.8 million results from last week appear concerning Brewer's fee proposal along with plenty of references to a so-called flab-and-fat tax.

I have no opinion about the fairness of a flab tax, but it does make me think about how easily our national debate about healthcare can be bogged down and distracted by some nickel-and-dime proposals. If every man, woman and child in Arizona's Medicaid program paid the fine the state's coffers would swell by $50 million, which is a drop in the state's annual $8.9 billion Medicaid budget.

Meanwhile, according to a recent study, three words cost our healthcare system several billion dollars each year. "Dispense as written," or DAW is used by some physicians to avoid the generic equivalent of brand name drugs. Some states allow the patients themselves to request a brand name drug even if the prescribing physician will allow generics.

Researchers at Harvard University, Brigham and Women's Hospital and CVS Caremark studied 5.6 million prescriptions for 2 million patients. Here is what they discovered:

  • Some 4.7% of the prescriptions were designated as DAW.
  • For the most part physicians, used DAW when no generic alternatives were available.
  • In 2% of the prescriptions, patients opted for brand name drugs even when a generic version was available and the physician approved the substitution.

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