Generic Drug Economics
| Drug Type | Average Cost per Prescription | Savings vs. Brand |
|---|---|---|
| Generic | $15–$30 | Baseline |
| Preferred brand | $100–$200 | Generic saves 80–90% |
| Non-preferred brand | $200–$400 | Generic saves 90–95% |
| Specialty | $1,000–$10,000+ | Biosimilar saves 30–50% |
Improving Generic Dispensing Rate
- Automatic generic substitution: Pharmacies automatically dispense generic when available
- DAW (Dispense as Written) management: Require clinical justification for brand-only prescriptions
- Member education: Educate members about generic equivalence and cost savings
- Physician outreach: Educate prescribers about generic alternatives
- Cost-sharing differential: Make brand drugs significantly more expensive than generics
- Generic step therapy: Require generic trial before approving brand drugs
GDR Benchmark
IQ Insight
A GDR of 85–90% is achievable for most employer plans. Plans with a GDR below 80% are leaving significant savings on the table. Each 1% improvement in GDR saves approximately $5–$10 PEPM. For a 500-member plan, improving GDR from 80% to 90% saves $25,000–$50,000 annually.