Should Drugs Be Free?

You hear this argument a lot especially within the context of value based design.  There are two reasons that people consider dropping drug copays to $0 for a commercial population – (1) they believe it will increase adherence and (2) they believe it will incent people to move to generics or to mail order.

First, I am fundamentally against providing prescription medications for free.  People have no vested interest in things that are free.  And, I strongly believe that people need a vested interest in their healthcare.  A temporary $0 copay or a rebate is okay, but I prefer a clear and simple message like “all generics are $4”.  (Not even Wal-Mart can say that…most $4 generic programs are only for 300 or so drugs.)

Tonight, I want to drill down specifically on using this to incent people to move to a generic drug.  I don’t believe this is a cost effective solution.  Here’s my quick model which says that a company with a 60% generic fill rate would have to increase their generic fill rate by 8 percentage points to breakeven.  I would argue that it is too big of  jump to happen (at least within one-year).

Why?  Because the 60% of people that are currently paying a copay which reduces the net cost to the client stop contributing.