Fortune Small Business:
Small-business owners have grudgingly grown accustomed to double-digit increases in their health-care insurance premiums each year. That probably won’t change radically in 2007, but one new idea promises to ease some of the burden: generic-only prescription plans.
In October, Medco Health Solutions, the giant pharmaceutical benefits manager known for its low-priced mail-order drug service, introduced Generics First, prescription coverage aimed at small and midsized companies. Under the plan, employees who purchase generic medicines receive a 90-day supply for a $10 copayment, while those purchasing brand-name drugs must pay the full cost out of pocket.
Meanwhile, employers are charged just $600 to $700 a year for each employee, about half of what traditional plans cost, says John Driscoll, president of Medco’s insured-markets group. Similarly, Wal-Mart has announced that it will soon start selling certain generics for as little as $4 a prescription. ‘That supports the notion that generics are one answer to rising drug costs,’ says Driscoll.
Medco’s plan is not the 1st to offer lower co-pays for generic drugs, but it is by far the most aggressive. That will probably make some employees unhappy.
Under Medco’s new plan, patients shoulder the cost of brand-name drugs even if they have no generic equivalent. But Driscoll says that as more and more generics are developed, employee complaints should diminish.
About $50 billion worth of pharmaceuticals are expected to go off patent by 2010. Generics already make up 50% of all prescriptions written, and at least 80% of all therapeutic drug categories have at least one generic available.
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