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In life care plans, when projecting future medical needs and associated costs for individuals with chronic illnesses, injuries, or disabilities, the choice between generic and brand-name medications is an important consideration. The choice should be based on the factors of cost, efficacy, safety, and individual needs.
- Cost: Generic medications cost less than brand-name equivalents. For individuals with chronic health conditions who require ongoing medications, using generics can significantly reduce the cost of a life care plan.
- Efficacy and Safety: In most cases, generic medications have the same active ingredients as their brand-name equivalents and are required to undergo rigorous testing to demonstrate their bioequivalence. This means that generics are expected to have similar therapeutic effects and safety profiles as the brand-name medications. The U.S. Food and Drug Administration (FDA) ensures that generics meet certain quality and effectiveness standards. The publication Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book, identifies generic medications approved on the basis of safety and effectiveness by the FDA under the Federal Food, Drug, and Cosmetic Act and related patent and exclusivity information.[1]
- Individual Responses: Individuals respond differently to different formulations of a medication, even if the active ingredient is the same. Substitution requirements in accordance with the Texas Pharmacy Act Chapter 562 state pharmacists may dispense a generically equivalent drug or interchangeable biological product if (1) the generic drug or interchangeable biological product costs the patient less than the prescribed drug product; (2) the patient does not refuse the substitution and; (3) a practitioner does not certify on the prescription form that a specific brand is medically necessary.[2] If a person has a well-documented medical history of an adverse response to a generic medication, then the brand-name medication should be included in the life care plan despite the higher cost.
- Changing Formularies and Availability: Life care plans should be periodically reviewed and adjusted to account for changes in medication availability and pricing. Over time, the availability of generic and brand-name medications can change due to market dynamics, patent expirations, and regulatory decisions. Patent protections expire and new generic medications become available. Reasonable costs of future medications should be based on the current availability of medications and the applicable efficacy to the subject, not potential future innovations, or development of new medications.
The choice between generic and brand-name medications for a life care plan should be based on a balanced assessment of factors such as cost, efficacy, safety, and medical necessity. The life care planner should include only the costs of medications recommended by physicians that have proved to produce the desired outcome and are directly related to treatment of the injury or illness addressed by the life care plan. If there is a generic version of a drug, the reasonable cost of the drug is the lower cost of the generic, unless there is a medical reason to specify the more expensive brand-name drug. If there is a medical reason to require the brand-name drug, the reasonable cost is the cost of the brand-name drug. The average price of the generic and brand-name versions of a drug is never the reasonable cost. Where the generic version of a drug is medically appropriate, averaging the generic cost with the brand-name cost serves only to unnecessarily inflate the cost in the life care plan.
RPC has prepared a separate blog post on its sources and methods for obtaining the prices of prescription drugs to include in life care plans. This blog post will be published on September 14, 2023.
[1] https://www.fda.gov/drugs/drug-approvals-and-databases/approved-drug-products-therapeutic-equivalence-evaluations-orange-book.
[2] The Pharmacy Act of Texas, Chapter 309.3.