Part D Beneficiaries May Pay More for Some Generics, Biosimilars Than Brand-Name Drugs

Medicare Part D enrollees may actually pay more for some generic drugs than they would for their brand-name counterparts because of the Part D benefit, according to findings of a new study appearing in Health Affairs.
Jaime Rosenberg
July 16, 2019
Medicare Part D enrollees may actually pay more for some generic drugs than they would for their brand-name counterparts because of the Part D benefit, according to findings of a new study appearing in Health Affairs.

Since 2012, beneficiaries who purchase brand-name drugs receive a manufacturer discount that goes toward their out-of-pocket (OOP) costs, which allows them to reach the catastrophic coverage phase with lower OOP spending compared with beneficiaries who purchase generic drugs and receive no such discount. The benefit was implemented by the Affordable Care Act, which attempted to close the Medicare Part D coverage gap.

“As a result of this concern, in early 2018 the Bipartisan Budget Act (BBA) modified the Part D benefit to ensure that beneficiaries would not pay more for biosimilars than for their brand-name counterparts,” wrote the researchers. “While this change corrected the misaligned incentives for biosimilars, it did not extend the protection to generic drugs.”

These findings are based on data from the Medicare Formulary Files for the first quarter of 2018. The researchers focused on the prices of 9 brand-name drugs with an approved generic or biosimilar, including:
  • Crestor and its traditional generic rosuvastatin
  • Lantus and its traditional generic basaglar
  • Abilify and its traditional generic aripiprazole
  • Invega and its traditional generic paliperidone
  • Remicade and its biosimilar Inflectra
  • Neupogen and its biosimilar Zarxio
  • Copaxone and its specialty generic glaitramer
  • Nilandron and its specialty generic nilutamide
  • Gleevec and its specialty generic imatinib

Prior to the BBA, biosimilars and specialty generic drugs required higher OOP costs compared with brand-name drugs. The difference ranged from $591 for imatinib compared with Gleevec to $1949 for Zarxio compared with Neupogen. A year’s worth of biosimilar Inflectra would cost a beneficiary $4097 compared with $2858 for brand-name Remicade.

During the same period, traditional generics carried an average annual OOP savings of $709 compared with brand-name drugs, ranging from $100 for basaglar compared with Lantus to as much as $1219 for aripiprazole compared with Abilify.

Since early this year, the BBA has resulted in a decrease in OOP spending for biosimilars. For example, patients using biosimilar Inflectra will save $1573 in annual OOP spending relative to pre-BBA spending. On the flip side, OOP spending for specialty generics is still increasing in relation to brand-name drugs because the manufacturer discounts on brand-name drugs have increased from 50% to 70% and are now applied to biosimilars but not other generics.

The researchers noted that, to date, guidance from CMS on biosimilar coverage under Part D has not fully addressed variations in the FDA approval processes for biosimilar products. Of the 9 drugs included in the analysis, just Inflectra and Zarxio are currently approved as biosimilars, while basaglar is not considered a biosimilar product under the Part D benefit because it was not approved or licensed under the abbreviated licensure pathway.

“Considering the distinction between biosimilars and generics within the Part D benefit, where the former is now subject to a substantial discount and the latter is not, it will be important to ensure that approval pathways do not create artificial barriers to the adoption of lower-price generic or biosimilar medications,” noted the researchers.

Reference
Dusetzina SB, Jazowski S, Cole A, Nguyen J. Sending the wrong price signal: why do some brand-name drugs cost Medicare beneficiaries less than generics? Health Aff (Millwood). 2019;38(7):1188-1194. doi: 10.1377/hlthaff.2018.05476.

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