A generic drug is the same as the reference brand-name drug in dosage, safety, strength, how it is taken, quality, performance, and intended use. Before approving a generic drug product, FDA requires many rigorous tests and procedures to assure that the generic drug can be substituted for the brand-name drug. The FDA evaluates the ANDA for substitutability, or “therapeutic equivalence,” of generic drugs on scientific evaluations. By law, a generic drug product must contain identical amounts of the same active ingredient(s) as the brand-name product. Drug products evaluated as “therapeutically equivalent” can be expected to have equal effect and no difference when substituted for the brand-name product. Generic drugs often cost 80–90% less than a brandname drug. Generic drugs are listed in the FDA Orange Book (see Orange Book) with an AB-rating, which means that FDA has determined that the drug is bioequivalent to the brand drug.

GER is the relative rate of the full cost of pharmacy reimbursement (drug ingredient cost and dispensing fee) of all generic drugs over a defined period of time expressed as a discount of the total weighted average wholesale price (AWP) for those same generic drugs over the specified time period. Reimbursement in some preferred pharmacy networks may be based at least in part on GER. Effective rate contracts may be used by PBMs to provide stability to the reimbursements that pharmacies receive in a given calendar year. (also see BER)

 

 

A 12- or 14-character number used to identify generic products by therapeutic use. It represents specific information on the drug, including drug group, drug class, drug subclass, drug base name, drug name, dosage form, and dosage strength.

The practice of dispensing an FDA equivalent generic drug (see generic drug) for a brand-name drug without needing the approval of the prescriber. Some states have substitution laws for certain drug classes, and prescriptions may need to be written a specific way to either allow or to override substitution.

A program used by some health plan sponsors that waives, on a limited basis, prior authorization (PA) rules for certain services provided by clinicians who are deemed “high performing.” The clinician’s “gold card” exemption from PA is effective for a limited service or set of services, for a defined period, and is reviewed regularly by the plan sponsor to ensure the clinician continues providing care meriting the PA exception.

A group purchasing organization is an entity that leverages the purchasing power of a group of businesses to obtain discounts from vendors based on the collective buying power of the GPO members. In health care, providers and organizations — such as hospitals, nursing homes, PBMs, pharmacies, and home health agencies — realize savings and efficiencies by aggregating purchasing volume and using that leverage to negotiate discounts with manufacturers, distributors, and other vendors. (See  also Rebate Aggregator). GPOs have existed in the U.S. since the early 1900s. Congress established the GPO Safe Harbor from the anti-kickback statute in 1987 to facilitate scale purchasing in health care goods and services.