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How Drug Patent Intelligence Facilitates Cost Containment

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Drug patent intelligence can prepare pharmacists and prescribers for new, less expensive alternatives

The National Conference of State Legislatures (NCSL) has been researching and providing guidance to states on medical cost containment for several years now. Increased use of generic prescription drugs and the use of prescription drug agreements and volume purchasing are two important components of their overall cost-containment recommendations.

The reason for preferring generics over brand name drugs is straightforward. They cost less. According to the NCSL, expanded use of generics can save states from 30 percent to 80 percent on the costs of some widely-prescribed medications, which translates to millions of dollars in savings every year. Other methods for keeping prescription drug costs under control include the use of preferred drug lists, manufacturer rebates, and multi-state purchasing and negotiations with manufacturers.

Drug patent intelligence can be an important element in cost containment strategies, because it helps providers forecast costs more accurately and allows improved readiness to take advantage of drug patent changes. Problems like drug shortages and “usage creep” with generics, however, can counteract some containment measures, and should be monitored closely.

Understanding the Drug Pricing Climate and Trends

The “generic cliff” of 2010 through 2013, when dozens of name brand drugs lost their drug patent protection, helped offset many of the sharply rising costs of new specialty medications. However, far fewer drugs are falling off the generic cliff these days, and some specialty drugs are projected to become top sellers over the next several years. The result may be more challenging cost containment, but drug patent intelligence can help.

When a provider knows, for example, that an expensive drug is scheduled to go off-patent, and that generic manufacturers are waiting in the wings to introduce their products, the provider can make inventories of the brand name drugs leaner, so that they don’t have to work through a large amount of it before being able to enjoy lower priced generics. Hence, drug patent intelligence is a critical ingredient in cost containment measures aimed at rising pharmaceutical costs.

Readiness for Drug Patent Changes Is Essential

By having and using drug patent intelligence strategically, healthcare providers can make sure pharmacies, physicians, and nursing staffs know when new, less expensive options will be available. Transitioning quickly to generics once drug patents expire requires scaling down inventories of branded products, and ensuring contract pricing on generics is available through Group Purchasing Organizations (GPOs).

Readiness also requires that EHR, billing, coding, and IT teams be prepared to enter the necessary information about new generics into all the applicable IT systems to accelerate the transition. Pharmacy staff can strive to keep prescribers informed about new generics so that prescribing patterns can adapt accordingly.

Prevent Shortages and Usage Creep from Counteracting Containment Measures

While drug patent intelligence can help healthcare providers contain drug costs, it’s important to ensure that once drug patents expire and generics are available, other issues don’t drive costs upward. For example, if a drug goes off-patent, generics become available, and a provider dispenses with strict guidelines on who should use it, “usage creep” can bring costs right back up.

Drug patent intelligence can also help providers with their strategies for coping with drug shortages, which can drive costs up unexpectedly. Many drug shortages involve generics, and cause providers to use more expensive alternatives, or brand name drugs. Having outstanding drug patent intelligence allows providers to know all their options – today and tomorrow – so that they can cope with drug shortages in the most cost-effective way possible.

Medical cost containment depends heavily upon keeping the costs of prescription drugs under control. Unfortunately, this is becoming more complicated due to the rise of high-cost specialty drugs, many of which will remain under patent for many years yet. However, the provider with intelligence on drug patents has the advantage of knowing more of their potential cost containment options than do providers with no such knowledge. And prescription drug cost containment is one area in which knowledge is power to make better choices.

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