Medicare Part D Formularies Actually Do Encourage Use of Generics, Say Researchers

Where generics get put Medicare Part D plan formularies and whether rebates for brand-name drugs have an undue influence on theri tiering has been a hot topic in the world of drug pricing and sales.

Avalere has helped stirred the pot with provocative reports on Part D formulary tiers and generics. For example, in February, the healthcare consulting firm came out a report that said in 2020, for the first time, more generics had been put on higher, non-generic tiers (or, you might say, a tier shared by branded and generic drugs) than on the lower tiers just for generics that usually have lower cost sharing. According to Avalere's research, 47% of generics were on tiers set aside for generics in 2020 compared with 64% in 2016.

But research published in this month’s Heath Affairs looks at the formulary and generics issues from a different angle and, with a with exceptions, paints a quite different picture.

A research team led by Stacie G. Dusetzina, an associate professor at Vanderbilt University School of Medicine, that included several Kaiser Family Foundation researchers, looked at 1,361 generic drugs that had an exact match (including the dose) to a brand-name drug in 2019. What they found was that 84% of the time, plans had generic-only coverage while 15% of the time both the brand-name and generic versions of the product were covered.

“Overall, our analysis suggests that the vast majority of Part D plan formularies are designed to encourage the use of generic drugs rather than their brand-name counterparts,” Dusetzina and her colleagues wrote in the conclusion of the Health Affairs paper.

When they looked at Part D plan formulary tiers, they found 125 products in which the brand-name drug was placed on a lower cost-sharing tier than the generic equivalent in at least one plan; 652 in which brand-name and their generic equivalents were on the same tier in at least one plan, and 1,334 in which the generics were placed on a lower cost-sharing tier than their brand-name counterparts.

Colcrys and Copaxone

They did, though, identify 218 products for which the generic was excluded, and the brand-name version covered, by at least plan. For the most part, these drugs were rarely prescribed, so not a lot of money is at stake.

But there are two exceptions, they noted: Colcrys, the brand-name version of colchicine, the medication for gout, and Copaxone, the brand-name version of glatiramer acetate, a multiple sclerosis medication.

There were fewer (511,036) Part D claims for brand-name Colcrys in 2018 than generic colchicine (823,663), but with Copaxone, the tables turn: The 185,180 claims for Copaxone far exceed the 27,616 for generic glatiramer acetate, according to the researchers’ tally. The spending per claim difference between Copaxone and generic glatiramer was $2,239 in 2018, according to Dusetizna and her colleagues, so the math shows that those 185,180 brand-name prescriptions translated into approximately $414 million in additional spending

In 2019, generic colchicine was excluded by 20%-46% of Part D plans in favor of the brand-name Colcrys in 2019, the researchers reported. A much smaller proportion — 10%-13% — of the Part D plans exclude generic glatiramer acetate in favor of Copaxone.

When Dusetzina looked at formulary tiers, they found 125 products in which the brand-name drug was placed on a lower cost-sharing tier than the generic equivalent in at least one plan; 652 in which brand-name and their generic equivalents were on the same tier in at least one plan, and 1,334 in which the generics were placed on a lower cost-sharing tier than their brand-name counterparts.