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Generic Prescription Drug Prices, Patient Cost-Sharing Increase

Generic prescription drug prices have increased despite consistent market pricing, the Avalere report stated.

generic prescription drug prices

Source: Thinkstock

By Sara Heath

- Medicare Part D beneficiaries are paying more for generic prescription drugs, despite the fact that the market price for those drugs has remained unchanged, according to an analysis from Avalere.

This trend is likely due to the tier these drugs are placed on in prescription drug formularies, the analysts explained.

Healthcare payers create drug formularies to cap prescription drug spending. Drug formularies are lists of preferred drugs for different health plans, in some cases determined by clinical effectiveness and value of the drug. Prescription drug cost and patient cost-sharing are a part of that value calculation in some cases.

More generic prescription drugs are being placed on higher formulary tiers, meaning patients have a higher cost-sharing for these drugs, the Avalere analysis revealed. Fifty-three percent fewer generic drugs were placed on the lowest tier – which yielded the lowest cost-sharing – between 2011 and 2015.

This shift in formulary placement ended up costing patients nearly $6.2 billion, a 93 percent jump in patient cost sharing during that four-year period.

Eleven percent of generic prescription medications were placed on tier one for Medicare Part D. By 2015, that number increased to 19 percent of drugs on tier one of drug formularies. Forty-six percent of medications were placed on tier two and 35 percent were placed on tier three.

These findings may have considerable consequences on patient access to generic medications, although those impacts were not studied in this analysis, the researchers said. Generic drugs have been a boon for Medicare Part D patients who seek generics and biosimilars to cut down on rising prescription drug costs.

As more generic drugs find their way on higher tiers of formulary lists, patients will face growing cost-sharing responsibilities.

High patient financial responsibility for prescription drugs has already proven an issue in the healthcare space. A 2018 survey from The Commonwealth Fund found that 62 percent of patients felt confident they could afford unexpected medication costs in 2017. This was down from an all-time high of 70 percent of patients who felt treatment could be affordable.

A separate report from America’s Health Insurance Plans (AHIP) revealed that prescription drug costs account for most of patient insurance costs. Nearly one-quarter of a patient’s health plan premium goes toward paying for prescription medications. This, coupled with rising out-of-pocket costs, underscores the growing cost of medications.

The issue of increasing prescription drug costs has gained the attention of healthcare stakeholders across the country, including the US Department of Health & Human Services (HHS). Earlier this year, HHS released a blueprint aiming to quell rising drug prices for patients.

“One of my greatest priorities is to reduce the price of prescription drugs. In many other countries, these drugs cost far less than what we pay in the United States,” President Trump said in a speech announcing the blueprint. “That is why I have directed my Administration to make fixing the injustice of high drug prices one of our top priorities. Prices will come down.”

However, the drug pricing blueprint contained more questions than answers, many critics said. While it is important for the Administration to focus on reducing drug costs for patients, it needs to tackle the issue with a more targeted and detailed plan.

A separate analysis from Avalere asserted that the plans that were included in the blueprint may do more harm than good. Specifically, a proposal to shift some Medicare Part B drugs to Medicare Part D would increase out-of-pocket spending for beneficiaries.

“Medicare beneficiaries typically have lower out-of-pocket costs in Part B – especially since so many seniors carry supplemental coverage,” Avalere senior director Richard Kane said in a statement. “Any proposal for shifting drugs to Part D needs to account for these differences.”

To be clear, many industry stakeholders do appreciate efforts to lower patient drug prices. Cost has proven prohibitive for some patients, keeping those patients from achieving adequate medication adherence and care management.

However, more work must be done to determine the best path forward for lowering drug costs and patient financial responsibility.

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