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Majority of Part D Spending Is on Brand Drugs in Classes with Generics

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With Congress likely to consider a second reconciliation bill in the near future that may include various drug-pricing and Medicare Part D reform policies as spending offsets, an updated Avalere analysis examines spending across classes with various availability of brand and generic drugs.

Medicare establishes standards to ensure that plan formularies in Part D cover treatments across conditions and diseases. Coverage standards are based on guidelines published by the United States Pharmacopeia (USP) that group drugs into categories and classes designed to include a range of therapeutic agents for diseases and conditions. While a small number of classes may have only a single drug, other classes may include a large number and a mix of brand and generic products. Part D spending patterns may reflect these differences in classes.

In most cases, Part D plans must cover at least 2 drugs per category and class. Additionally, the Centers for Medicare & Medicaid Services (CMS) requires more generous coverage in the classes of clinical concern, or the “protected classes,” which include drugs for certain mental health conditions, seizures, HIV, cancer, and immune suppression after transplants.

In 2019, brand drugs accounted for 79% of total Part D spending ($143.1 billion) while generics accounted for 21% ($38.7 billion). Similarly, a prior Avalere analysis conducted in 2017 revealed that brand drugs accounted for 77% of total Part D spending ($117.1 billion), while generics accounted for the remaining 23% of spending ($34.4 billion). Specifically, single-source brand drugs, which do not have an equivalent generic drug available on the market, accounted for about 70% of total Part D spending ($128 billion) in 2019 compared to 72% in 2017. The remaining 8% of brand spending in 2019 was on multi-source brand drugs with generic equivalents.1 While single-source brand drugs accounted for a significant share of 2019 Part D spending, the vast majority of single-source brand drug spending was in USP classes that included other generic or brand drugs. In fact, far less than 1% (~$2 million) of Part D spending in 2019 was on brand medicines that were the only product available in their therapeutic class.

Figure 1. Part D Spending by Class and Type of Drug, 2017 vs. 2019
Figure 1. Part D Spending by Class and Type of Drug, 2017 vs. 2019

Funding for this research was provided by the Pharmaceutical Research and Manufacturers of America. Avalere Health retained full editorial control.

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Avalere mapped Part D drugs listed under USP Medicare Model Guidelines (MMG) Formulary Reference File (FRF) to MediSpan to identify single-source and multi-source drugs, as well as brand and generic products. The USP MMG-FRF maps the USP MMG v8.0 to the CMS 2019 FRF to create a comprehensive list of drugs that fall under each class of the USP MMG v8.0. Drugs listed as having “no USP class” in the USP MMG-FRF were analyzed as a separate “class” under their respective therapeutic categories. MediSpan’s determination of a generic product requires that a product be pharmaceutically equivalent but not necessarily bioequivalent. Avalere used MediSpan’s determinations but did not assess products’ therapeutic equivalence. Avalere used the 2019 Part D Public Use File (PUF) to identify the Part D spending associated with each drug. Notably, 156 drugs in the 2019 Part D PUF file accounting for 0.7% of total Part D spending were not found in the USP MMG v8.0 Alignment File.


  1. Drugs that do not face competition from equivalent generics are referred to as “single-source” brand drugs. Once a drug loses its intellectual property protection, 1 or more manufacturers can make a generic version of the drug. Brand drugs with generic equivalents are called “multi-source drugs.”
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