Most of the time, generic drugs are safe, less expensive alternatives to name-brand prescription medicines. Except when they aren’t.

In the past few years, some generic medicines have become so expensive that consumers have avoided filling prescriptions altogether. Take, for example, digoxin, a commonly prescribed heart medicine first approved by the FDA in 1954. Its price recently increased by 2,800% – in one year.

This is an especially big problem when you consider that generics account for approximately 85% of the prescriptions filled by Horizon Blue Cross Blue Shield of New Jersey (Horizon BCBSNJ) members in 2019.

A new alliance announced last week seeks to ensure that generic drugs remain affordable for all who need them. The Blue Cross Blue Shield Association (BCBSA) and 18 Blue Cross and Blue Shield (BCBS) companies – including Horizon BCBSNJ – have partnered with non-profit drug maker Civica to help reduce the costs of certain generics for consumers.

“Prescription drug spending is the single biggest driver of the higher health costs facing our members and business customers. We cannot, and will not, simply wait for others to solve this problem,” said Kevin P. Conlin, Horizon BCBSNJ’s President, CEO and Chairman. “Horizon will continue to pursue every available opportunity, including creating new options when needed. We’ll also continue to work with pharmaceutical industry leaders who want to partner with us to help our members get the prescriptions they need to achieve their best health at a price they can afford.”

It’s anticipated that the partnership will be able to save consumers hundreds of millions of dollars.

Civica was formed in 2018 by three national philanthropies and numerous health systems. It now includes over 1,200 hospitals that account for 30% of the hospital beds across the country. Its original mission was to reduce and prevent shortages of generic, injectable drugs at hospitals, and the price spikes that occur when supplies of these medicines get too low.

BCBSA and BCBS companies will provide $55 million in funding to expand Civica’s mission beyond hospitals to address the costs of prescriptions filled in an outpatient setting, like a local pharmacy.

What can consumers expect?

While this first-of-its-kind partnership hasn’t yet determined which drugs it will produce, the plan is to focus first on high-priced generics that currently face limited or no competition. The newly created subsidiary will then work with Civica and trusted, FDA-approved drug manufacturers to produce quality medicines that can compete with these generics.

According to Civica, research into the actual costs of manufacturing and distributing generic drugs suggests prices for select high-cost generic drugs can be reduced to a fraction of their current costs.

Civica has a proven record of minimizing drug shortages and stabilizing the price of generics in the hospital setting, where drug shortages cost health systems an estimated $230 million due to increased spending required for alternative therapies.

As a non-profit, Civica passes the hundreds of millions of dollars in cost savings it achieves along to consumers. To hold themselves accountable, the partners have publicly committed to reporting the shared savings annually.

“Being there for our members when they need us most is at the center of everything we do at Horizon,” added Conlin. “To us, that means more than just helping them get the care they need. It means working with doctors, hospitals and others to make health care more affordable and making health care work the way that our members want it to. It also means taking a leadership role to develop creative solutions that shape the future of health care. Horizon has never waited for the future of health care, we’ve made it happen.”

The initial generic medications are expected to be available from Civica by 2022.

Part of a comprehensive strategy to lower health care costs

Horizon BCBSNJ recognizes that helping our members decrease their overall health care costs means tackling prescription drug costs, the single biggest driver of higher health costs facing consumers.

On average, about 22 percent of the amount people spend on insurance premiums goes toward prescription drugs – roughly the same percentage that’s spent on physician services like doctor’s visits. But, prescription drug spending is rising faster than any other category of health care.

In addition to partnering with Civica, Horizon BCBSNJ has instituted other solutions aimed at lowering prescription costs:

• Price transparency. Horizon BCBSNJ, together with Prime Therapeutics, provides doctors an innovative online platform from Gemini Health that allows them to quickly and easily identify alternatives to prescriptions that will result in lower out-of-pocket cost for their patients.
• Health system collaboration. Horizon BCBSNJ works closely with health care providers to align drug formularies and promote lower-cost options that reduce the total cost of care.
• Case management. Horizon BCBSNJ pharmacists identify members that use a lot of high-cost medicines and intervenes to help identify options that improve patient health.
• Opioid management. Alert systems flag potential abuse and overutilization of opioids, and our pharmacy lock-in program averts duplicate opioid prescriptions.

At the end of the day, preventing generic drug price spikes by ensuring an adequate supply is critical to reducing prescription drug costs overall. The partnership with Civica is a major step in that direction.