Choosing brand-name drugs over generics costs Medicare $1B a year

Choosing brand-name drugs over generics costs Medicare Part D hundreds of millions of dollars annually, a new study has found. Photo by Thomas Breher/Pixabay
Choosing brand-name drugs over generics costs Medicare Part D hundreds of millions of dollars annually, a new study has found. Photo by Thomas Breher/Pixabay

March 2 (UPI) -- Substituting generic medications for brand-name drugs requested by prescribing physicians would save the Medicare Part D program nearly $1 billion annually, according to an analysis published Tuesday by JAMA Network Open.

The program would save another $700 million if Medicare beneficiaries asked for generic drugs instead of brand-name products, the data showed.


While physicians are required to request lower-cost generic drugs when available, the findings suggest that prescribing the pricier options "happens way more frequently than it should," the researchers said.

"When you or your physician ask to fill a prescription with a branded drug when a generic is available, the cost increases to you and your insurer," study co-author Gerard Anderson told UPI.

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"This occurs primarily for high-cost, brand-name drugs," said Anderson, a professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health in Baltimore.


Medicare Part D provides supplemental outpatient drug coverage plans for seniors 65 and older and those receiving disability benefits.

The program accounts for about one-third of total prescription drug spending in the United States, according to Anderson and his colleagues.

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For this study, the researchers analyzed Medicare Part D prescription drug claims in 2017, focusing on a random sample representing 20% of Medicare beneficiaries and 224 drugs that had at least one generic substitute and at least 1,000 claims.

The researchers analyzed information from each claim, including the type of drug dispensed, the amount Medicare Part D spent and any patient out-of-pocket spending, the researchers said.

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Among the 169 million filled prescriptions analyzed in the study, 8.5 million involved dispensing a brand-name prescription drug, even when generics were available, the data showed.

Of these, 17%, or 1.4 million claims, occurred because the prescribing provider requested a brand-name drug over a generic version, the researchers said. In another 14%, or 1.1 million claims, patients requested the brand-name drugs over generic options.

Despite laws in all 50 states and the District of Columbia promoting generic drugs, prescribing clinicians and patients together requested brand-name prescription drugs over generics 30% of the time when a brand-name drug was dispensed, the data showed.


If all branded drugs requested by prescribers had been substituted with the corresponding generics, Medicare Part D would have saved $997 million in 2017, according to the researchers.

In addition, Medicare beneficiaries would have saved $161 million in 2017 if prescribing physicians had requested generic drugs over brand-name options, the researchers said.

If all branded drugs requested by patients had been substituted with generics, Medicare Part D would have saved $673 million and patients would have saved $109 million, they said.

In 2017, the Medicare Part D program spent a total of $4.42 billion on brand-name prescription drugs where no specific drug selection was indicated by a clinician or pharmacist, the data showed.

The Medicare program should look into these open-ended prescriptions to determine if it can reduce costs by encouraging beneficiaries and doctors to choose generics over brand-name drugs when possible, the researchers said.

While branded prescription medications account for only 5% of Medicare Part D drug claims, these findings highlight how expensive these products are to Medicare beneficiaries and the Medicare program, they said.

"In 70% of the cases, when a branded drug is given to a patient instead of a generic drug, the Medicare program does not know why, and this substitution adds a billion dollars to Medicare's spending every year," Anderson said.


"The Medicare program should find out why this is occurring," he said.

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