Part D plans don't push beneficiaries to take brand-name drugs over generics: study

Woman paying for a prescription at a pharmacy
A new study looks at how Part D plans prioritize generics and brand-name drugs on their formularies. (Getty/Tom Merton)

Medicare Part D plans largely design their formularies to encourage use of generics, despite some criticism to the contrary, a new study shows.

Researchers led by a team at the Kaiser Family Foundation and Vanderbilt University analyzed more than 4.1 million Part D plan and product combinations, and found that in 84% of cases only the generic was covered by the insurer.

In 15% of cases, the plan covered both the generic and the brand-name product, according to the study published in Health Affairs.

For the remaining 1% of cases of where the plan preferred the branded drug, costs to both the beneficiary and Medicare were generally low regardless of whether a brand-name or generic drug was prescribed.

RELATED: Part D premiums likely to increase slightly in 2021, CMS says

The researchers also found limited use of utilization management tools such as step therapy or prior authorization to influence which drug a beneficiary selects when both are covered on the formulary.

The researchers said there is merit to continuing to examine scenarios where Part D plans put both generic and brand-name products on the same tier, as that could lead to higher costs for beneficiaries, but investing substantial policymaking efforts on this issue is unlikely to lead to large amounts of savings.

"Policymakers should continue to monitor Part D formulary coverage patterns to ensure consistent and generous coverage for generic drugs, given their important role in reducing prescription drug spending," the researchers said.

"Given that preferential tiering of brand-name products and the exclusion of generics is not widespread in Part D plans, this suggests that policy making designed to address this relatively infrequent coverage pattern may be unlikely to yield significant savings," they said.

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