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Medication switches are most often thought of as changing a brand-name product to a generic drug. Switching also can mean the changing of one brand name product for another, or the switching of a generic medication to the same drug produced by another generic manufacturer. These can be initiated by the physician, pharmacy or PBM. Switches are done to reduce the overall cost of prescription medications. Generic or therapeutic switching remains one of the great but underutilized opportunities for lowering prescription drug costs. 

• Medication switches are done to reduce the high cost of  prescription drugs.
• Generic substitution means that patients prescribed an expensive  brand-name medication are given a less-expensive generic  equivalent in the pharmacy.
• Therapeutic substitution means switches within a drug class; a  brand-name medication may be replaced by a less expensive brand-name or generic product.
• The cost savings are substantial, especially for health plans.

One of the biggest mistakes employers make is not continuously monitoring drug spend to identify generic switch savings opportunities. You can’t set it then let it go hoping for the best. In other words, standard PBM reports won’t uncover the wasteful spending. You need a trained set of eyes to catch savings opportunities early and often.

For example, Medicare spent $13.4 billion on the Nexium acid reflux pill between 2011 and 2017, but could have saved $12.7 billion if, instead, prescriptions were written for generic copies of the older version of the drug called Prilosec. Similarly, Medicare beneficiaries spent more than $832 million on Nexium between 2011 and 2015, but could have $690 million if prescribed a generic version of Prilosec.

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