Requests for brand name over generic prescription drugs cost Medicare $1.7 billion in a single year

The Medicare Part D program would have saved $977 million in a single year if all branded prescription drugs requested by prescribing clinicians had been substituted by a generic option, according to a new study by researchers at the Johns Hopkins Bloomberg School of Public Health.

And if Medicare patients had requested generic drugs instead of brand name drugs, the Medicare Part D program would have saved an additional $673 million in one year, for a total savings of $1.7 billion.

Medicare Part D offers supplemental outpatient drug coverage plans for seniors 65 and older and people receiving disability benefits, and accounts for about one-third of total prescription drug spending in the U.S.

Despite laws in all 50 states and the District of Columbia promoting generic drug dispensing, the study found that in 2017 under the Medicare Part D program, prescribing clinicians and patients together requested brand name prescription drugs over generics 30% of the time when a brand name drug was dispensed.

Among the 169 million filled prescriptions analyzed, 8.5 million involved dispensing a brand-name prescription drug when generics were available. Of these, 17% (1.4 million claims) involved the prescribing provider requesting a brand-name drug over a generic version, and another 13.5% (1.1 million claims) involved patients requesting brand name drugs versus generic options.

WHAT'S THE IMPACT?

Even with laws in place, it's still entirely common to request a brand name drug, which results in increasingly higher costs for both patients and the Medicare Part D program. 

Insurers offering Part D plans are being required to offer a price comparison tool starting in 2023, due to a Centers for Medicare and Medicaid Services final rule issued in January aimed at providing transparency for consumers so they can choose the lower-priced drug.

The researchers analyzed Medicare Part D prescription drug claims from 2017, drawing from a random sample representing 20% of Medicare beneficiaries and 224 drugs that had at least one generic substitute and at least 1,000 claims.

The researchers analyzed information from each claim, including the type of drug dispensed, Medicare Part D spending and the patient's out-of-pocket spending.

Medicare patients would also benefit by paying less for prescription drugs. Such patients would have saved $161 million in 2017 if prescribing providers had requested generic drugs over brand name options, and Medicare patients would have saved $109 million if they had requested generic drugs.

In all, Medicare patients spent $270 million more than necessary for prescription drugs in the year studied.

While branded prescription drug dispensing accounts for only 5% of Medicare Part D drug claims when both brand and generic drugs are available, these findings underscore how costly brand name drugs are to Medicare beneficiaries and the Medicare program.

The researchers also found that in 2017 the Medicare Part D program spent a total of $4.42 billion on brand name prescription drugs where no specific drug selection was indicated by a clinician or pharmacist. The authors recommend that the Medicare program look into these open-ended prescriptions to see if it can reduce expenditures by encouraging opting for generic over brand name drugs when available.

The findings suggest that policies targeting both the clinician and the patient could have the greatest potential to promote generic drug use and therefore cost savings. Improving clinicians' perception of generic medication, raising awareness of the availability of generic drugs, and limiting direct pharmaceutical marketing can have substantial influence over patients' medication preferences.

THE LARGER TREND

The Centers for Medicare and Medicaid Services issued a final rule in January that will require Part D plans to offer a real-time benefit-comparison tool starting January 1, 2023.

CMS said the rule is meant to strengthen and modernize the Medicare Advantage and Part D prescription drug programs so enrollees can obtain information about lower-cost alternative therapies under their prescription drug benefit plan. The agency said it expects the changes will result in an estimated $75.4 million in savings to the federal government over 10 years.

Medicare Advantage and Part D rates aren't typically announced until later in the year, but the Centers for Medicare and Medicaid Services released the rates three months ahead of schedule, ostensibly to provide Medicare health and prescription drug plans more time to consider the information as they prepare and finalize their bids for 2022.

Those bids are due June 7.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com