Name-brand prescription drugs vs. generic: What’s the difference?

The CU Health Plan is committed to helping members and their families make informed decisions about their health care. The rising cost of prescription drugs in recent years has been a topic of conversation for many people nationwide. Understandably so, as a recent RAND Corporation study indicates prescription drug prices in the U.S. are an average of 2.5 times higher than other Western countries.

Rising costs of prescription drugs affect administration of the CU health plans, as well. The premium budget for CU health plans has increased by $19.1 million over the last three years.

With such a significant cost burden, considering a switch to generic drugs over brand-name drugs could help manage your and your family’s health care spending. Not only do generic drugs save you money, they also save the CU health plans money.

There are many common misconceptions about generic drugs that may sway consumer opinions in favor of brand-name drugs instead. Debunking these misconceptions can help to reveal true benefits of opting for generic drugs over brand-name alternatives.

It’s likely that many people have experienced a generic drug substitute for a brand-name drug whether or not they were aware of it. Take, for instance, something as common as an acute seasonal sinus infection. You and your doctor discuss a Zithromax – commonly known as a “Z-Pak” – prescription at your appointment. When you visit your pharmacy to pick up your prescription, you come to find the name of your medication instead to be azithromycin tablets, a generic alternative to the brand-name Zithromax. No need to worry – a generic drug is an exact chemical copy of the active drug in a brand-name medication, and you’ve likely just filled your prescription for a lower cost than the brand-name, too.

The CU Health Plan spoke with Gina Moore, PharmD, MBA, Associate Dean and Associate Professor at the University of Colorado Skaggs School of Pharmacy, to examine misconceptions about the pharmacological efficacy and cost-savings of generic drugs in comparison to their brand-name counterparts.

Misconception No. 1: Brand-name = better medication

“When people hear the word ‘generic,’ they may think the drug does not equate to its brand-name counterpart in terms of effectiveness. However, this is not the case,” Moore said. “The United States Food and Drug Administration (FDA) requires generic drugs to meet rigorous review standards and act in the same way in the body as the brand-name drug.”

Generic drugs are carefully created to the same quality, safety and effectiveness as their brand-name alternative. Because generic drugs contain the same active ingredients as the brand-name, generic drugs work the same way in the body, and they have the same quality, strength, dosage form, intended use, route of administration, and clinical benefit as the brand drug.

“There may be some slight differences in inactive ingredients, but the active ingredient is exactly the same,” Moore said.

Misconception No. 2: Generic and brand-name drug cost really isn’t that different.

The most significant advantage of using generic prescription drugs is cost savings. Generic lower-cost prescriptions can save members up to 85% of the cost of the brand-name drug. When you consider if any of your prescriptions are recurring maintenance drugs, that’s supplemental savings each time you refill your medication.

ADHD medication demonstrates an example of the cost savings in switching to generic prescriptions. The cost for a 30-day supply of Adderall XR 15mg is $206, while the generic equivalent is $71.

Moore confirms opting for generic drugs benefits individuals and helps mitigate health care costs for our greater CU community as a whole.

“Choosing generic not only helps you as an individual plan member, but helps CU keeps costs of the health plan drug benefit as low as possible,” she said.  

Misconception No. 3: The lower cost for generic drugs indicates lower-efficacy medication.

Many misconceptions of generic drugs stem from their lower cost. Generic drugs are priced lower than brand-name drugs because generic drug manufacturers are usually not the ones who developed, tested and marketed the drug.

Once a drug’s patent expires, generic manufacturers may submit an abbreviated new drug application to the FDA for approval. When submitting the application, generic manufacturers also submit data to show their version of the drug is equivalent to the brand-name drug. Once several manufacturers have a generic version of a particular drug on the market, competition results in lower prices. 

“As for the efficacy of generic drugs,” Moore said, “a large research study that compared generics with brand-name medicines demonstrated very small differences (3% to 5%) in absorption between the generic and brand-name drugs,” meaning some generics were absorbed slightly less and some slightly more than their brand-name equivalent. The variation also occurs between batches of a drug, whether it is a brand-name or competitor.

“This is expected and considered clinically acceptable,” Moore said. “All drug manufacturers are regularly inspected by the FDA and their manufacturing records closely evaluated.”

Moore said people may not realize that brand-name manufacturers often sell or relabel the brand-name product as a generic. CU Health Plan members may always consult with their physician or pharmacist for additional information.

Moore said there are just a few instances where use of a generic drug, or switching from one manufacturer to another, is not advisable. Establish a best practice of consulting with your physician first regarding questions and concerns about changes to your prescription.

“With most drugs, a 3% to 5% difference in absorption makes absolutely no difference, but there are certain drugs and disease states in which the amount of a drug is carefully adjusted to the desired therapeutic effect,” she said. “These drugs are referred to as having a narrow therapeutic index and tiny differences may result in the drug therapy not being effective or causing side effects or toxicity.”

Examples of these drugs include warfarin (a drug thinner) and thyroid replacement hormones. 

“It’s generally advised to stick with one manufacturer and not switch between brands when an individual is stabilized on therapy in those specific conditions,” Moore said. “Because there are numerous generic manufacturers, sticking with the brand-name is preferred.”

So, what does this mean for CU Health Plan members? All CU Health Plan members can benefit from cost savings by switching to generic drugs when available. Based on the plan’s higher member out-of-pocket costs, members of the ‘CU Health Plan-High Deductible’ may experience the most immediate cost savings by switching to generic, because these plan members will pay less each time they pay for their prescription.

For members of the Exclusive or Extended plan, the copay for a brand-name drug may be $20 higher than its generic equivalent ($35 brand-name copay vs. $15 generic copay for a 30-day supply), but the additional copay is not representative of the total additional cost. Here, the excess cost is reflected in the premiums paid by CU and plan participants.

As costs continue to fluctuate in correlation with a dynamic health care landscape, CU Health Plan members may find switching to generic drugs an easy and effective way to help mitigate their family’s health care spending. Members are encouraged to talk with their providers about their generic medication options and any questions they may have about making the switch to generic over brand-name drugs.

The CU Health Plan is a team of health benefits professionals rallied around a common vision – creating a world where living healthily is easy. We want to live in that world and our plan members tell us they do, too. We use that shared vision as motivation to constantly improve the health insurance plans and wellness programs we offer to employees at the organizations we work with. The CU Health Plan team promotes the overall wellbeing of our members by expanding employers’ ability to deliver valued, holistic health benefits and mitigate the rising cost of health care. For more information, visit www.becolorado.org.