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07/20/2021

AAM report: Medicare plans lag in adopting new generics

The Association for Accessible Medicines’ latest report found that Medicare Part D plans are slow to add new generics to their formularies and often place them on nongeneric pricing tiers.
David Salazar
Managing Editor
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Medicare Part D plans are slower than commercial plans to adopt new generics, and even when adopted, the generics are less likely to be part of a generic cost tier. That’s according to a new report from the Association for Accessible Medicines that examines the speed of first generics entering formulary coverage for both Medicare Part D plans and commercial plans. 

The most recent example the report cites is from 2020, when 72 generics were approved as the initial generic available for a certain drug. AAM’s analysis found that, only 21% of these generics were covered by Medicare Part D plans on average. When they were covered by Part D plans, they were placed on non-generic tiers 79% of the time. Among commercial plans this year, an average of 66% of plans adopted the new generics launched in 2020, ending up on generic tiers 98% of the time. 
 

chart, bar chart
Click to enlarge (Source: AAM)

“Today’s report reveals persistent design flaws within Medicare Part D that act as barriers to coverage of and access to recently approved, low-cost generic drugs. There’s simply no justification for providing America’s seniors worse access to lower-cost generics than beneficiaries in commercial health plans receive,” said Christine Simmon, AAM senior vice president of policy and strategic alliances and director of the Biosimilars Council. “This analysis provides critical data illustrating how crucial first generics are in driving drug prices down and how coverage within Part D plays a key role in ensuring patients reap their full benefits.”

[Read more: State of the Pharmacy 2021: Executives weigh in]

Alongside the report, AAM outlined various policy changes it said would help improve patient access to new generics. They include:

  • Requiring a time frame within which Medicare Part D plans must review first generics and biosimilars, with the need for written justification to be given to the Center for Medicare and Medicaid Services for not placing them on a formulary;
  • Prohibiting or restricting Part D plans from placing generic drugs on non-generic tiers;
  • Decreasing plan liability for generics and biosimilars relative to reference brand products; and
  • Aligning plan incentives for using low-cost products in the catastrophic phase. 

“These changes will meaningfully reduce out-of-pocket costs for Part D beneficiaries and increase savings for taxpayers and the Medicare program overall,” the report says. 

To read the full report, click here

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