Page 22 - Management Theory 2023-2024 Edition

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3. Average Prescription Cost: It is the total prescription costs divided by the total number of prescriptions
dispensed. This ratio allows the user to find out how brand name drug or generic drug utilization may
affect the total costs of the healthcare plan.

An average prescription cost is affected by the following factors:

1. Inflation
2. Economy
3. Prescription utilization
4. Cost of medications
5. Generic utilizations
6. Manufacturer’s discount policy

4. Generic Utilization Rate: It can be calculated by dividing the total number of generic prescription claims
dispensed by the total number of prescription claims. The percent of generic is always less than 100
since there are always patent-protected brand names on the market.

A percent generic utilization rate is affected by the following factors:

1. Pharmacists
2. Prescribers
3. Advertising
4. Copayment fee structure of health plan

5. Percent DAW Prescriptions: It is the total number of prescriptions dispensed with DAW or “Dispensed
As Written” divided by the total prescription claims.

A percent DAW is affected by the following factors:

1. Prescribers
2. Copayment fee structure of health plan
3. Patients’ psychology

6. Percent Formulary Compliance: It can be calculated by dividing total number of prescriptions filled by
using the formulary recommendation by the total number of prescription claims.

A percent formulary compliance rate is affected by the following factors:

1. Prescribers’ incentive if they follow formulary
2. Pharmacists’ incentive if they follow formulary

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