Differences Between Managed Care and Fee-for-Service Medicaid in the Use of Generics for High-Rebate Drugs: The Cases of Insulin Glargine and Glatiramer

Abstract

BACKGROUND: Statutory rebates and preferred drug lists (PDLs) may result in differential use of biosimilars and generics between Medicaid fee-forservice (FFS) and managed care organizations (MCOs), particularly for branded drugs with large price increases subject to large inflation rebates, which are not retained by MCOs. OBJECTIVE: To compare the use of 2 biosimilar/generics of branded drugs whose list price tripled in 2008-2018 across states with only FFS Medicaid, with MCOs not subject to statewide PDLs, with MCOs subject to statewide PDLs, and with MCOs where drug benefits have been carved out.METHODS: Using 2018 Medicaid drug utilization data, we extracted reimbursement records in Q1-Q3 2018 for insulin glargine 100 IU/mL and glatiramer. We calculated the market share of the biosimilar insulin glargine and generic glatiramer among the corresponding drugs. We compared the market share of these products across 4 state groups: states with only FFS Medicaid, states with MCOs not subject to statewide PDLs for each drug, states with MCOs subject to PDLs, and states with MCOs where drug benefits have been carved out into FFS. We evaluated the correlation between state-level penetration of MCOs and share of biosimilar/generic products. RESULTS: Nationally, the market share of these biosimilar/specialty generics was higher among MCOs than FFS (60.5% vs. 3.7% for biosimilar insulin glargine; 59.4% vs. 5.7% for generic glatiramer; all P < 0.001). The market share of these products was highest in states where MCOs were not subject to statewide PDLs for these drugs (59.1% for biosimilar insulin glargine, 52.8% for glatiramer) compared with states with MCOs subject to PDLs (2.4%, 18.0%); states with only FFS Medicaid (0.9%, 1.7%); or states where drug benefits have been carved out of MCOs (0.0%, 1.0%; all P < 0.001). There was a significant correlation between state-level MCO penetration and share of generic/biosimilar products (R = 0.50 for biosimilar insulin glargine and 0.57 for glatiramer; all P < 0.001). CONCLUSIONS: For 2 drug classes with large price increases, use of biosimilars/generics was greater in MCOs than FFS Medicaid, specifically in states without PDL requirements for MCOs. These findings may reflect financial incentives for MCOs to use drugs with lower list prices because they do not benefit from statutory Medicaid rebates.

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“…Managed care organizations tend to encourage the use of lower-cost drugs, such as generics and drugs which have a negotiated supplemental rebate. Another recent study 32 showed greater use of generics and biosimilar products for insulin in Medicaid managed care organizations than in fee-for-service Medicaid. To what extent some managed care organizations have been encouraging the use of cheaper generics of non-SGLT2i and non-GLP1RA glucose-lowering drugs at the expense of expensive, newer glucose-lowering drugs such as SGLT2i and GLP1RA, and how that affects patient outcomes, should be further studied.…”

Improving Global Healthcare and Reducing Costs Using Second-Generation Artificial Intelligence-Based Digital Pills: A Market Disruptor

“…Switching from branded to generic medications is a common cost-containment measure for healthcare systems [ 30 ]. Increased incentives for generic drug use are proposed as a means for improving overall health [ 31 , 32 ].…”

Anticipated efficiencies, real costs: Medicaid managed care organizations and the pharmacy benefit

“…19 One explanation for this perception of inefficiency is that Medicaid MCOs do not collect statutory or inflationary rebates under the Medicaid Drug Rebate Program for outpatient drugs dispensed to their beneficiaries. 20 This creates an incentive for these organizations to direct patients towards drugs with lower list prices rather than drugs with lower net post-rebate prices. Faced with a choice between filling a script for a new drug that costs $10 or an older drug for the same indication that has a list price of $20 but a post-rebate cost of $8, MCOs that maintain an independent PDL have an incentive to steer patients towards the newer drug, despite its higher net cost to government payers.…”