Seniors Pay More for Medicare Part D Generics Despite Stable Prices

  • This page as PDF


Avalere analysis finds that price of generic drugs has remained flat but the cost to seniors is increasing.

New research from Avalere finds that seniors with Medicare prescription drug plans (Part D) pay more for generic drugs even as the market price of these drugs stays stable.

Avalere experts note that seniors are paying more because generic drugs are being placed on higher formulary tiers where patients pay more out-of-pocket for drugs. The number of generic prescription drugs placed on the lowest tier, where patients pay less for their drugs, declined 53 percentage points between 2011 and 2015. This shift resulted in a 93% increase in total patient cost-sharing for these drugs, or a total of $6.2 billion.

This higher cost-sharing and movement of generics to higher tiers did not correspond with an increase in the underlying price of generic drugs over that same time period, according to an analysis by Avalere experts of the average volume-weighted price of generics that were included on plan formularies in both 2011 and 2015.

In 2011, 71% of generic drugs were placed on tier 1, the lowest tier in the formulary. By 2015, 19% of covered generics were placed on tier 1, while 46% were placed on tier 2 and 35% were placed on tier 3 or higher (Figure 1). This shift represents a 53 percentage point decrease in the number of generics being placed on the lowest tier between 2011 and 2015.

Tier placement of generics

The use of generic drugs has saved the Medicare Part D program billions of dollars. However, higher tier placement of generic drugs is leading to higher out-of-pocket costs for patients and may reduce savings.

For more information on this analysis, connect with us.

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

Webinar: Decoding the CY 2025 Advance Notice Join Avalere’s healthcare policy experts as they dissect the CY 2025 Medicare Advantage Advance Notice and discuss the future trajectory of MA in Part D and potential outcomes, headwinds, and tailwinds for health plans. Learn More
Watch the Recording
From beginning to end, our team synergy
produces measurable results. Let's work together.
Back To Top