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Generic drug pipeline to benefit employers and employees

Individuals and families covered by HSA-qualified, high-deductible health plans, or fully insured health plans that have a deductible included before their prescription benefit co-pays apply, could see significant reductions in their out-of-pocket expenditures over the next 14 months as generic versions of seven of the world’s 20 best-selling drugs, including cholesterol fighter Lipitor and blood thinner Plavix, hit the market.

According to the London research firm EvaluatePharma Ltd, best selling drugs with about $255 billion in global annual sales will go off patent between now and 2016. Generic competition is expected to slash the cost to patients and companies that provide health benefits.

The lower cost prescription drugs could perhaps directly benefit most those who have HSA plans that require insured’s to pay the full (usually discounted) cost of most prescription drugs until they have reached their plan’s annual deductible limit.

Data collected by First Horizon Msaver, a leading HSA administrator, reveals that 44 percent of transactions between 2007 and 2009 involving an HSA debit card account took place in a pharmacy. When viewed from the perspective of the total dollar amount of a transaction, drug stores and pharmacies placed right behind doctors and health care practitioners with 32 percent of all HSA dollars being spent at pharmacies while 37 percent of all HSA spending was at doctor offices.

Last year, the average generic prescription cost $72, versus $198 for the average brand-name drug, according to consulting firm Wolters Kluwer Pharma Solutions. Those figures average all prescription from short-term to 90-day ones.

A quick look at today’s prices for two of the drugs that will be going off patent illustrates that there is potential for significant savings.

An online drug pricing service, ScriptSave®, reports that a person in Overland Park, KS, would currently expect to pay $186.81 for a thirty day supply of the popular blood thinner Plavix. Likewise, the cost of a thirty day supply of Lipitor is now shown to be $167.29 at the same pharmacy. While it is not possible to predict what the generic cost will be for these specific drugs, the cost should be significantly reduced if recent trends hold.

For example, the prescription version of a heartburn medicine Protonix is reported by ScriptSave to cost $123.16 for a 30-day supply. The generic version is listed for $12.81 at the same pharmacy, and some retailers sell the most popular generics for as little as $4 for a thirty-day supply.

The good news about the expected drop in prescription drug prices may not end with HSA, and fully insured plan members being able to save and keep more money in their health savings accounts. Roy Ramthun who has served as Special Assistant to the President for Economic Policy at The White House and now heads HSA Consulting Services, LLC suggested that the reduction in prescription drug costs could also hold premium increases down.

“It could help keep premiums down if people switch to the generic drugs,” said Ramthun. “HSAs are well-documented for encouraging generic drug utilization.

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