In Medicare Part D Plans, Low Or Zero Copays And Other Features To Encourage The Use Of Generic Statins Work, Could Save Billions

Abstract

The private health plans that administer the Medicare drug benefit use various tools to encourage the use of generic drugs in order to lower total drug spending. Higher generic drug use also appears to encourage consumers to continue taking their medications. This study examines how different drug plan benefit and formulary designs influence the selection of generic drugs to treat high cholesterol among Medicare beneficiaries. We found that a low copayment for generic statins is the strongest factor influencing the use of these drugs, and eliminating the copay altogether has an especially large effect. Other tools that have an effect are higher copays and prior authorization or "step therapy" requirements for popular brand-name statins. In this drug class, where generics can be readily substituted for brand-name drugs for most people, adoption of the policies most effective in encouraging generic use could lead to considerable savings for the plans, Medicare, and enrollees. We estimate that every 10 percent increase in the use of generic, rather than brand-name, statins would reduce Medicare costs by about $1 billion annually. Plans could apply the lessons from this analysis and consider a zero copay for use of generic drugs, and Medicare might consider further incentives for plans to use benefit designs that increase such drugs' use.T he costs of medications that are still covered by patents continue to rise faster than medical price inflation.

The Effects of Cost Sharing on Adherence to Medications Prescribed for Concurrent Use: Do Definitions Matter?

“…Additionally, medications prescribed for common chronic conditions are available at retail pharmacies as $4 cash generics. 23 By contrast, branded drugs, including those with no generic alternatives, can carry higher cost-sharing requirements and are often on formulary tiers with higher copayments than most generics. [22][23][24][25] Consequently, cost sharing would be expected to have a minimal effect on concurrent adherence for patients who are prescribed only generic medications, while those who are prescribed branded medications could be vulnerable to costrelated nonadherence.…”

“…23 By contrast, branded drugs, including those with no generic alternatives, can carry higher cost-sharing requirements and are often on formulary tiers with higher copayments than most generics. [22][23][24][25] Consequently, cost sharing would be expected to have a minimal effect on concurrent adherence for patients who are prescribed only generic medications, while those who are prescribed branded medications could be vulnerable to costrelated nonadherence. Among patients with standard Medicare Part D coverage, for example, Joyce et al (2013) found modest reductions (3%-4%) in the use of generic medications in the doughnut hole and greater reductions (8%-12%) in the use of branded drugs.…”

“…Nonetheless, our results are consistent with studies of the Medicare Part D benefit that find that cost sharing has a greater negative effect on adherence to branded drugs, particularly in the doughnut hole. 22,23,39 Finally, our study sample was limited to patients who were continuing users of oral antidiabetic medications in the same class and did not include patients who received but did not fill prescriptions or who started new medications in our study year. But, higher cost sharing has been shown to adversely affect medication uptake, and we would expect concurrent adherence measures to vary in their sensitivity to cost-related nonadherence among patients with new prescriptions for medications with different cost-sharing requirements.…”

Association of Medicare Part D Medication Out‐of‐Pocket Costs with Utilization of Statin Medications

“…Previous studies focusing on drugs commonly used by Medicare beneficiaries have shown significant variation in coverage across plan formularies and other benefit design features, including deductibles, cost sharing, and coverage in the standard coverage gap known as the donut hole (Hoadley et al 2006(Hoadley et al , 2008aHoadley, Hargrave, and Merrell 2007).…”

A Case Study in Generic Drug Use: Should There Be Risk Adjustment in Incentive Payments for the Use of Generic Medications?

“…10 Payers commonly offer financial incentives to providers for achieving benchmark rates of generic drug use. 11,12 Providers and payers should understand the extent to which patient case mix affects the ability to prescribe generic medications. For example, if an IPA sees a high volume of patients with insulindependent type 2 diabetes mellitus, they will be forced, due to the nature of the disease state, to prescribe more brand-name products for which therapeutic alternatives do not exist (i.e., glucometers, insulin, glucose testing strips, glucose testing lancets, insulin syringes) compared with an IPA that has a low volume of insulin-dependent type 2 diabetic patients.…”