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Some Part D Beneficiaries May Pay Full Price for Certain Generic Drugs

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Summary

Avalere analysis finds that when generics in Part D are placed on the preferred brand tier some patients pay the full cost for their drugs.

While current Centers for Medicare and Medicaid Services (CMS) policy prohibits plans from charging cost sharing that exceeds a product’s negotiated price in Part D, in some cases patients may be responsible for the full cost of the drug. This can occur when the cost of the product is less than the assigned copay for the tier on which the product is placed. As generic drugs continue to be covered on brand-drug formulary tiers in Part D, more patients are liable for the full cost of their medicine.

To determine how often this may occur, Avalere examined situations where generic drugs appear on Part D plans’ preferred-brand tier instead of a generic-drug tier. Avalere’s analysis focused on this tier specifically, as plans more frequently assign a copay rather than coinsurance on the preferred-brand tier. Avalere then analyzed patient cost-sharing amounts in the initial coverage phase to determine how often patients would be liable for the full cost of the generic drug during that phase of the benefit.

The analysis indicated that in cases where the generic is covered on the preferred-brand tier nearly 45% of Medicare Part D beneficiaries paid the full cost of their generic drug at least once while in the initial coverage phase (Figure 1). Since the generic drug cost less than the copay assigned to the preferred brand tier during the initial coverage phase, some beneficiaries in these cases paid the full price of the generic drug at the pharmacy.

This occurrence was concentrated in certain classes of drugs, with a relatively high proportion of patients paying the full cost of at least one generic drug fill in 4 therapeutic classes (Figure 1). For example, nearly 90% of beneficiaries paid the full cost of generic anti-asthmatic and bronchodilator agents placed on the preferred-brand tier.

Figure 1. Percentage of Certain Medicare Part D Beneficiaries Who Paid the Full Cost of the Generic at Least Once, by Product Class
Figure 1. Percentage of Certain Medicare Part D Beneficiaries Who Paid the Full Cost of the Generic at Least Once, by Product Class

Note. Includes beneficiaries taking a generic drug covered on the preferred-brand tier while in the initial coverage phase of the benefit.

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 2017 under a research data use agreement with the CMS 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.

Avalere identified generic products on a preferred-brand tier with a copay that was equal to or exceeded the list price of the generic product. Avalere used the CMS’s Part D 30-day-supply negotiated price file to identify the cost of the chemical entities at the National Drug Code level. Then, for each generic product, Avalere determined the share of patients in the initial coverage limit phase of their benefit who paid the full cost of that generic at least once, 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.

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