Correspondence: David B. Snow, Medco Health Solutions, Inc. 100 Parsons Pond Drive Franklin Lakes, NJ 07417, USA. Tel: +1 201 269 5920; Fax: +1 201 269 1222; E-mail: David_Snow@medco.com

¹is Chairman and Chief Executive Officer of Medco Health Solutions, Inc. Prior to joining Medco in 2003, he held executive leadership positions at Wellchoice, Oxford Health Plans, American International Healthcare, and US HealthCare. He also co-founded Managed Healthcare Systems (later renamed AmeriChoice). He earned a master's degree in healthcare administration from Duke University and a bachelor's degree in science and economics from Bates College. Medco is the leading pharmacy benefit manager in the United States based on its 2006 net revenues of more than US$42bn. Medco's prescription drug benefit programmes are designed to moderate the cost and enhance the quality of pharmacy healthcare for private and public employers, health plans, labour unions and government agencies, and for individuals served by the Medicare Part D Prescription Drug Program.

Received 17 August 2007; Revised 17 August 2007.

Abstract

Over a seven-year period (2006–2012), a US$77bn market in brand-name drugs will open to generic competition in the United States, dramatically expanding the opportunities to lower the costs of pharmaceutical care. To capitalise on this emerging market, benefit plans will need highly effective strategies for increasing the use of generics in day-to-day clinical practice — including financial incentives for plan members, expanded use of mail-order pharmacy, and vigorous efforts to communicate cost-savings opportunities to members and their physicians. Online cost comparison tools are an especially powerful vehicle for informing members about their options and motivating them to switch to lower-cost alternatives. At an industry level, maximising the generic market opportunity will require a more favourable regulatory framework and a realignment of incentives for new drug development.