Under Medicare Part D, beneficiary cost sharing for a prescription drug is determined based on the negotiated price, which is a price negotiated between a Part D plan sponsor and the pharmacy and may differ from a manufacturers’ list price. Centers for Medicare & Medicaid Services (CMS) policy prohibits Part D plans from charging beneficiaries cost-sharing amounts that exceed a product’s negotiated price. As plans continue to place  generic drugs on higher-cost Part D formulary tiers, more patients are liable for the full costs of their medications.

A prior Avalere analysis examined Medicare Part D claims to determine how often this occurs when generic drugs are covered on Part D plans’ preferred-brand tier (often Tier 3), as plans more frequently assign fixed dollar copays rather than coinsurance on this tier. Avalere then analyzed patient cost-sharing amounts during the initial coverage phase to determine how often patients would be liable for the full cost of the generic drug. The prior analysis found that, in 2017, 45% of beneficiaries in one of these plans paid for the full cost of their medication at least once during the year.

In this new assessment, Avalere finds that the share of patients paying the full cost of a generic medication placed on a preferred brand tier has increased over time. In 2020, 63% of beneficiaries across all Part D plans paid the full cost of a generic at least once, an increase of 18 percentage points from 2017 to 2020 (Figure 1).

For some classes of drugs, a substantial proportion of patients paid the full cost at least once. These include thyroid agents (95%), cardiotonics (89%), antianxiety agents (86%), and musculoskeletal therapy agents (82%) (Figure 2).

Segmented by plan type, a slightly higher percentage of patients in prescription drug plans (PDPs; 64%), compared to Medicare Advantage Prescription Drug Plans (MA-PDs; 62%), paid the full cost of their generic prescription at least once in 2020. Similarly, a higher share of patients in Low Income Subsidy (LIS)-benchmark plans (68%) paid full price when compared to patients in non-benchmark plans (62%) (Figure 3).

Funding for this research was provided by the Association for Accessible Medicines. Avalere retained full editorial control.

Methodology

Avalere analyzed CMS prescription drug event data from 2020 via a research collaboration with Inovalon, Inc. and governed by a research-focused CMS data use agreement (DUA) to determine the share of patients who paid the full cost of a generic product while in the initial coverage limit phase of their benefit. Per the DUA’s requirement, Avalere analyzed a random sample representing less than 20% of the total Part D population.

Avalere used CMS’s Part D 30-day supply negotiated price file to identify the cost of the chemical entities at the National Drug Code level. Avalere identified patients in the initial coverage phase of their benefit who paid the full cost of a generic product on a preferred-brand tier at least once. Then, Avalere determined the share of patients who paid the full cost out of the total number of patients who received the generic. Avalere segmented its findings at the chemical entity level and by Generic Product Identifier 2.

Avalere also segmented the findings by plan type, including MA-PD, standalone PDP, LIS-benchmark, and non-benchmark. Benchmark LIS plans are basic PDPs that are at or below the LIS benchmark. The LIS benchmark is calculated each year by CMS based on the weighted average of all premiums in each PDP region. Plans that are at or below that calculated benchmark level are designated as an LIS benchmark plan for that year.

Avalere compared findings from this analysis with findings from its previous analysis completed using 2017 data.

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