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Impact of medicare part D plan features on use of generic drugs.

ABSTRACT: Little is known about how Medicare Part D plan features influence choice of generic versus brand drugs.To examine the association between Part D plan features and generic medication use.Data from a 2009 random sample of 1.6 million fee-for-service, Part D enrollees aged 65 years and above, who were not dually eligible or receiving low-income subsidies, were used to examine the association between plan features (generic cost-sharing, difference in brand and generic copay, prior authorization, step therapy) and choice of generic antidepressants, antidiabetics, and statins. Logistic regression models accounting for plan-level clustering were adjusted for sociodemographic and health status.Generic cost-sharing ranged from $0 to $9 for antidepressants and statins, and from $0 to $8 for antidiabetics (across 5th-95th percentiles). Brand-generic cost-sharing differences were smallest for statins (5th-95th percentiles: $16-$37) and largest for antidepressants ($16-$64) across plans. Beneficiaries with higher generic cost-sharing had lower generic use [adjusted odds ratio (OR)=0.97, 95% confidence interval (CI), 0.95-0.98 for antidepressants; OR=0.97, 95% CI, 0.96-0.98 for antidiabetics; OR=0.94, 95% CI, 0.92-0.95 for statins]. Larger brand-generic cost-sharing differences and prior authorization were significantly associated with greater generic use in all categories. Plans could increase generic use by 5-12 percentage points by reducing generic cost-sharing from the 75th ($7) to 25th percentiles ($4-$5), increasing brand-generic cost-sharing differences from the 25th ($25-$26) to 75th ($32-$33) percentiles, and using prior authorization and step therapy.Cost-sharing features and utilization management tools were significantly associated with generic use in 3 commonly used medication categories.

SUBMITTER: Tang Y

PROVIDER: S-EPMC4142208 | biostudies-literature | 2014 Jun

REPOSITORIES: biostudies-literature

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Impact of medicare part D plan features on use of generic drugs.

Tang Yan Y Gellad Walid F WF Men Aiju A Donohue Julie M JM

Medical care 20140601 6

<h4>Background</h4>Little is known about how Medicare Part D plan features influence choice of generic versus brand drugs.<h4>Objectives</h4>To examine the association between Part D plan features and generic medication use.<h4>Methods</h4>Data from a 2009 random sample of 1.6 million fee-for-service, Part D enrollees aged 65 years and above, who were not dually eligible or receiving low-income subsidies, were used to examine the association between plan features (generic cost-sharing, differenc ...[more]

PMID: 24824538

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Project description:ImportanceIn response to scrutiny over high drug prices, manufacturers of insulin and direct-acting antiviral agents for treating hepatitis C have recently introduced authorized generic alternatives to their patented brand-name products. These authorized generic drugs have list prices at least 50% lower than the list price of the brand-name drugs, which should result in savings to patients. However, it is unclear whether these authorized generic drugs are offered on Medicare Part D formularies because they may not provide savings to plans or Medicare.ObjectiveTo assess Medicare Part D formulary coverage for 4 brand-name formulations of insulin and direct-acting antiviral agents and their authorized generic formulations.Design, setting, and participantsThis cross-sectional study used Medicare Prescription Drug Plan Formulary and Pricing Information Files from quarter 3 of 2020 and Medicare Part D plan enrollment for September 2020. Four patented brand-name drugs (sofosbuvir and velpatasvir fixed-dose combination tablets [Epclusa], ledipasvir and sofosbuvir tablets [Harvoni], insulin lispro [Humalog], and insulin aspart [Novolog]) and their authorized generic formulations for all Part D stand-alone prescription drug plans (n = 959) and Medicare Advantage prescription drug plans (n = 3148) were studied.Main outcomes and measuresBeneficiary-weighted formulary coverage of brand-name and authorized generic products; beneficiary out-of-pocket costs; and prerebate plan, manufacturer, and Medicare spending on brand-name and authorized generic products.ResultsIn quarter 3 of 2020, 97% of beneficiaries were in plans that covered brand-name drugs only or both brand-name and authorized generic drugs; approximately 3% were in plans that covered authorized generic drugs only. Observed authorized generic drug list prices were 67%, 62%, and 50% lower than list prices for Epclusa, Harvoni, and each brand-name insulin product, respectively. Medicare beneficiaries using authorized generic drugs could save $270 per year for 12 vials of Humalog and $2974 for a full course of Harvoni. Plans, however, have limited incentives to encourage authorized generic drug use because rebates for brands likely exceed savings available with authorized generic drugs, particularly for beneficiaries with spending that reaches the Medicare Part D coverage gap.Conclusions and relevanceThe results of this cross-sectional study suggest that authorized generic drugs for insulin and direct-acting antiviral agents may lower out-of-pocket spending for patients but are unlikely to provide savings for Part D plans or Medicare. Instead, these drugs allow manufacturers to offer products at a lower list price without materially lowering net prices or profits.

Project description:Policy Points Only a small minority of new drugs in "nonprotected" classes are widely covered by Part D plans nationwide in the year after US Food and Drug Administration (FDA) approval. Part D plans frequently apply utilization management restrictions such as prior authorizations to newly approved drugs in both protected and nonprotected classes. Drug price influences both formulary inclusion (in nonprotected classes) and coverage restrictions (in both protected and nonprotected classes), while other drug characteristics such as therapeutic benefits are not consistently associated with formulary design. Plans do not seem to favor the minority of drugs that are determined to offer added therapeutic benefit over existing alternatives.ContextMedicare Part D is an outpatient prescription drug benefit for older Americans covering more than 46 million beneficiaries. Except for mandatory coverage for essentially all drugs in six protected classes, plans have substantial flexibility in how they design their formularies: which drugs are covered, which drugs are subject to restrictions, and what factors determine formulary placement. Our objective in this paper was to document the extent to which Part D plans limit coverage of newly approved drugs.MethodsWe examined the formulary design of 4,582 Part D plans from 2014 through 2018 and measured (1) the decision to cover newly approved drugs in nonprotected classes, (2) use of utilization management tools in protected and nonprotected classes, and (3) the association between plan design and drug-level characteristics such as 30-day cost, therapeutic benefit, and the US Food and Drug Administration (FDA) expedited regulatory pathway.FindingsThe FDA approved 109 new drugs predominantly used in outpatient settings between 2013 and 2017. Of these, 75 fell outside of the six protected drug classes. One-fifth of drugs in nonprotected classes (15 out of 75) were covered by more than half of plans during the first year after approval. Coverage was often conditional on utilization management strategies in both protected and nonprotected classes: only seven drugs (6%) were covered without prior authorization requirements in more than half of plans. Higher 30-day drug costs were associated with more widespread coverage in nonprotected classes: drugs that cost less than $150 for a 30-day course were covered by fewer than 20% of plans while those that cost more than $30,000 per 30 days were covered by more than 50% of plans. Plans were also more likely to implement utilization management tools on high-cost drugs in both protected and nonprotected classes. A higher proportion of plans implemented utilization management strategies on covered drugs with first-in-class status than drugs that were not first in class. Other drug characteristics, including availability of added therapeutic benefit and inclusion in FDA expedited regulatory approval, were not consistently associated with plan coverage or formulary restrictions.ConclusionsNewly approved drugs are frequently subject to formulary exclusions and restrictions in Medicare Part D. Ensuring that formulary design in Part D is linked closely to the therapeutic value of newly approved drugs would improve patients' welfare.

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Impact of medicare part D plan features on use of generic drugs.

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Impact of medicare part D plan features on use of generic drugs.

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