Chairman's Post: Insights on Last Week's Poll - The Effects of Generic Drugs on Healthcare Costs

Use of generics in hospital affiliated medical practices is very much on the mind of our hospital respondents in our latest weekly poll.

Use of generics, where appropriate, is generally well accepted practice and usually incentivized by insurance companies where they can. Of course, there are issues that arise when guidelines call for automatic substitution; physicians protest when their medical judgment is questioned. Issues occasionally arise regarding quality of the compound manufacturing, patent protections and – most recently – liability differences from patent brand drugs. But the public and the profession has generally accepted broad use of generics.

Generics save money for the purchaser. If the purchaser is a patient – the savings are out of their own pocket. If the purchaser is an insurer, the savings impact premium as well as co-pays.

Health systems often manage affiliated physician practices and clinics. They have a community interest in making drugs cheaper to the patient and may have a financial interest if the hospital or the practice is financially incented – or “at risk.” While physicians themselves are on the front line of prescribing, health systems will increasingly develop policies and guidelines to further this practice – but because they are health systems…they will proceed with a high degree of caution.

It’s fascinating that the number of health systems amongst our respondents planning on implementing new policy in this area is split on their motivation – to primarily benefit the consumer versus to deal with financial risk – in the same manner as health systems who already have policies or guidelines. This pattern reinforces the findings.

There will be a lot more activity in this area. It is considered “low handing fruit” in the risk business.

But, getting it right and comprehensive actually takes some work.