The Effects of Copayments and Generic Substitution on the Use and Costs of Prescription Drugs

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Rising costs of prescription drugs are a concern to both private and public purchasers. Common methods of controlling or sharing costs include copayments and incentives to use generic substitutes. A study of prescription drug use and costs for a set of employer groups reveals that a common change in the rate of copayment from $3 to $5 per prescription is estimated to be associated with a 5% decrease in the number of prescriptions, an offsetting increase in ingredient costs per prescription, a 10% decrease in employer costs per person, and an increase in employee costs of approximately the $2 copayment per prescription.

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