Generic Drugs Are a Great Way to Save Money

July 11, 2011— -- Recently, I got a call from a co-worker who wanted a referral to a lab that could test his anti-seizure medication to see if it contained the right amount of the active ingredient. He has taken the same medication for years, but recently had a scary episode where the drug didn't appear to be as effective as usual. I told him, sure, I could recommend a lab, but that I might be able to save him some time and money by asking a couple of questions first.

Know About Drugs With a 'Narrow Therapeutic Index'

You see, when he mentioned that it was a drug that prevents seizures, my antennae went up. That's because anti-seizure meds are one drug category that is known to have a "narrow therapeutic index," meaning the dose must be very precise or sensitive patients can have a bad reaction. Here are drug categories that can have this narrow therapeutic index:

Anti-seizure medications

Asthma drugs

Blood thinners

Heart medications

Psychiatric drugs

To understand more about narrow therapeutic indexes, it helps to understand more about generics. There's a misperception that generic drugs aren't as good as name-brand drugs. That's baloney. Here are the facts. The Food and Drug Administration requires generic medicines contain the exact same active ingredient in the same amount as the name brand med.

The only difference is in the inactive ingredients used to bind the generic pill together. These inactive ingredients can affect how the body absorbs the active ingredient, which could make a generic medication slightly more or less effective than a brand medication for a particular individual. It's also possible for individuals to have negative reactions to the inactive ingredients themselves, like, perhaps, a dye. To be fair, your body could also react better to the inactive ingredients in a generic than in the original name brand.

That's why, if you take a medication in one of the categories above, you should ask your doctor or pharmacist for guidance if you want to try the generic. In some instances, taking a particular medicine -- whether it is the original name brand or a specific generic -- may work best.

And that brings up one more little-known wrinkle that my co-worker had never heard of: You might not always get the same generic! For example, there are about a dozen different manufacturers who make generic versions of the sleep aid Ambien. To cut their own costs, pharmacies may switch from one manufacturer to another, depending which currently offers the best price. So, from month to month your pills could look different and the inactive ingredients could be different.

My co-worker had been taking a generic successfully for years. I suspect his pharmacy switched to a different manufacturer of his generic and that caused the whole mess. He's adjusted his prescription now and, thankfully, all is well.

The Cost Benefits of Generics in General

For the rest of us who take other medications that aren't so sensitive, there are huge savings to be had by going generic. Here's how it works: When a pharmaceutical company develops a new drug, it is rewarded with a patent that lasts 20 years so it can make money on its invention and recoup the costs of developing it. But when the 20 years are up, other companies are allowed to manufacture generic versions of the drug. The philosophy is that medications that improve lives should be as broadly available as possible.

This is the moment in time, when you can start to SAVE BIG. In fact, going generic will save you more money on prescriptions than any other move.

Here's an example: The antidepressant Prozac is famous. But I bet you've never heard of "Fluoxetine." It should be famous too -- for being cheap. Fluoxetine is the generic for Prozac. I searched an online pharmacy, using the cash prices an uninsured person would pay. Look what happens if you buy this generic medication instead of the name brand:

Going Generic

Name-brand Prozac: $8,290/year

Generic Fluoxetine: $1,940/year

SAVINGS = $6,350/year

Whoa! You can save $6,350 a year if you buy the generic in this case. I feel the depression lifting already! That's a phenomenal savings -- 77 percent -- for somebody without insurance. And if you are insured, you can see why your insurance company would want to nudge (shove?) you toward the generic to save itself money.

It makes you wonder why doctors write prescriptions for brand names at all when they could save their patients a lot of money by specifying a generic. The answer is that there are nearly 6,000 medications on the market, making it impossible for doctors to keep track of them all and when patents expire and generics become available. Plus, name-brand drug company reps make the rounds daily, dropping off free samples to keep their drugs' names in the doctor's memory. Generic drug makers don't do that.

For the vast majority of people, generics are a life-saving, cost-saving option. Since doctors won't necessarily tell you about them, you need to ask. One option is to request to start out on a generic drug and see if it works for you. If it's not effective, then you can try the name brand -- or another generic. If you want the generic option, make sure your doctor does not write or check the box that says "dispense as written" or "do not substitute" on your prescription form. These words are usually meant to instruct the pharmacist to use a name-brand only.