Authorized generic drugs ‘insufficient’ to improve affordability in Medicare Part D
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Authorized generic drugs for insulin and direct-acting antiviral agents may lower out-of-pocket spending for patients but are unlikely to provide savings for Part D plans or Medicare, data show.
“Compared with brand-name drugs, authorized generic versions of direct-acting antiviral agents for hepatitis C and insulin would have resulted in lower out-of-pocket spending for Medicare beneficiaries,” Stacie B. Dusetzina, PhD, associate professor of health policy and the Ingram associate professor of cancer research at Vanderbilt University School of Medicine in Nashville, Tennessee, and colleagues wrote in JAMA Internal Medicine. “However, authorized generic drug coverage was limited for some Part D beneficiaries, with many beneficiaries in plans with coverage for only brand-name drugs. For Part D plan sponsors, this decision likely reflects rational economic behavior because net prices (after rebates) for brand-name drugs in these classes may be similar to or lower than net prices for authorized generic drugs.”
As Healio previously reported, manufacturers of insulin and direct-acting antiviral agents for treating hepatitis C recently introduced authorized generic alternatives to their patented brand-name products during a time when the brand-name drugs faced no immediate threat of generic drug competition. The authorized generic drugs have list prices at least 50% lower than the list price of the brand-name drugs; the announcements followed congressional scrutiny over high drug prices.
In a cross-sectional study, Dusetzina and colleagues analyzed data from Medicare Prescription Drug Plan Formulary and Pricing Information Files from the third quarter of 2020 and Medicare Part D plan enrollment for September 2020. Researchers assessed coverage for four brand-name formulations of insulin and direct-acting antiviral agents and their authorized generic formulations: sofosbuvir and velpatasvir fixed-dose combination tablets (Epclusa, Gilead), ledipasvir and sofosbuvir tablets (Harvoni, Gilead), insulin lispro (Humalog, Eli Lilly) and insulin aspart (Novolog, Novo Nordisk).
“We selected these drugs because we believe they are the only ones that had authorized generic formulations launched more than 1 year before expected patent expiration and faced no traditional generic competition as of the third quarter of 2020,” the researchers wrote.
Primary outcomes were beneficiary-weighted formulary coverage of brand-name and authorized generic products; beneficiary out-of-pocket costs; and pre-rebate plan, manufacturer and Medicare spending on brand-name and authorized generic products.
In the third quarter of 2020, 97% of beneficiaries were in plans that covered brand-name drugs only or both brand-name and authorized generic drugs. Approximately 3% of beneficiaries were in plans that covered authorized generic drugs only.
Researchers found that authorized generic drug list prices were 67%, 62% and 50% lower than list prices for Epclusa, Harvoni and each brand-name insulin product, respectively. “Medicare beneficiaries using authorized generic drugs could save $270 per year for 12 vials of Humalog and $2,974 for a full course of Harvoni,” the researchers wrote.
Plans, however, have limited incentives to encourage authorized generic drug use; rebates for brands likely exceed savings available with authorized generic drugs, particularly for beneficiaries with spending that reaches the Medicare Part D coverage gap.
“Ultimately, the availability of authorized generic options for products not facing traditional generic competition is insufficient to improve affordability for Medicare beneficiaries,” the researchers wrote. “The results of this study suggest that efforts to modify the Medicare Part D benefit should also ensure that incentives for plans and beneficiaries are well aligned and that beneficiaries do not overpay for drugs that are a better value for their health plan and the Medicare program.”
Perspective
Back to TopI appreciate the extraordinary costs of safely bringing drugs to the consumer. I am troubled by the economic burdens faced by people with diabetes, who must have constant access to their medications. Insulin, a biologic, costs more to manufacture and securely deliver than many generic medications, but these costs hardly explain the sticker shock faced by many underinsured patients.
As a clinician, I spend an inordinate amount of my time weaving through a maze of insurance coverage and reordering less desirable, but more affordable, alternatives for my patients. Denying patients these treatments is often shortsighted. We are forced to use older, less-effective medications at the expense of greater risk of disabling complications such as blindness and kidney failure. From a stratospheric public-health point of view, this is penny-wise and pound-foolish. We are kicking the huge costs of complications down the road rather than focusing on the economies of prevention.
I have read numerous articles on how the supply chain seems to add to the cost of insulin, but I still fail to understand the extraordinary prices faced by consumers whose lives depend on these drugs. Too many of my patients reduce their insulin doses, share it with other family members or omit it altogether.
Generic insulins will never join the $4-a-month-club, but they will bring healthy competition to a protected market and be welcomed by health care providers and their patients. The doctors in training at most teaching hospitals have little if any experience with the less expensive insulins since the hospital formulary is supplied exclusively with branded products. I suspect that drug companies deliberately supply them at very low cost, inadvertently putting the hospital in the position of promoting higher cost medications since patients are discharged on those same insulins. Newly trained doctors become inadvertent pawns in the high cost of drugs by having little [if] any exposure to advocating and using lower cost alternatives. Providers and patients need to be educated that cheaper insulin does not necessarily mean less effective diabetes control.
Medicare could be the 800-pound gorilla in insulin-pricing by competitive pricing and having the courage to stand by the consumer, rather than the pharmaceutical companies.
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