3 Words Could Increase Drug Costs By $1.2B Annually

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.

The reaction by insurers is mixed. Some fill the prescriptions and move on while others have policies in place that require preauthorization for DAW medications. At some health plans the enrollee must pay the difference in the cost between an equivalent generic and the requested brand name drug.

With 3.6 billion prescriptions filled in the U.S. each year, researchers estimate that DAW instructions could increase prescription costs by $1.2 billion annually and cost our healthcare system $7.7 billion.

That's a big chunk of the national healthcare bill, but even more worrisome is the idea that some patients aren't even filling DAW prescriptions. Researchers have found that patients who asked their physicians to write brand-only prescription were less likely to fill the prescription when they discovered that a generic version couldn't be substituted.

As you might expect, most of dispense-as-written prescriptions are written by physicians who  are older, as are the DAW patients. While it is important for physicians to be able to prescribe the drugs their need, it is possible that generic drug education for both physicians and patients might help reduce the need for DAW. With all of the pharmacy statistics collected by pharmacy benefits managers and health plans, this could be a slam dunk.

'Dispense as written' is not nearly as captivating a term as a 'flab tax.' You are probably not going to hear about it on the nightly news, but with its potential economic wallop, it deserves some attention.