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Medicare Part D Generics Get Cheaper
Whether or not they’re approaching the “doughnut hole,” Medicare patients can save a bundle by switching to generic drugs, and the exact dollar amount grows each year. According to a July 2011 report by AARP’s Public Policy Institute, prices for the 189 generics most widely prescribed to Medicare beneficiaries fell by an average of 7.8% in 2009.
The new data is consistent with a 5-year downward trend, according to the group’s annual Rx Price Watch Report. “This report highlights an important opportunity for people with Medicare Part D Plans,” said AARP Senior Vice President Cheryl Matheis. “Switching to less-costly generics now can dramatically cut your pharmacy bills and might keep you out of the doughnut hole,” Matheis told seniors.
Cuts were even steeper for seasoned generics. Retail prices fell 35% for the 164 generics that have been available since the study began in 2004. Treating chronic disease is also cheaper—according to the report, the average annual cost of 3 generic prescriptions taken on a chronic basis fell by $612 between 2005 and 2009.
Drugs with the biggest price reductions in 2009 were the antidepressant sertraline in strengths of 100 mg (44.5%) and 50 mg (42.2%); Zocor’s rival simvastatin in strengths of 40 mg (30.2%) and 20 mg (27.4%); and gabapentin, an anticonvulsant (24.6%). Costs for a small handful of generic drugs shot up, with metformin 1000 mg leading the pack at a dramatic price increase of 190.1%.
Meanwhile, the price of branded drugs increases steadily every year. A previous Rx Price Watch report found that retail prices for the 217 brand drugs most widely used by Medicare beneficiaries increased by 8.3% in 2009. The opposing price trends add up to huge savings potential, both for consumers and health plans grappling with soaring health care costs.
“Low-cost generic drugs are a means of helping consumers and third-party payers reduce their prescription drug costs, particularly when prices remain stable or decrease,” the authors wrote.
Bill to Stop Pay-to-Delay Clears Hurdle
Legislation passed in July by the Senate Judiciary Committee reignited the dispute over patent settlements— payments made by big pharma companies to generic drug makers to keep copycat drugs off the market. Under the bipartisan bill, called the Preserve Access to Affordable Generics Act, the “pay-to-delay” deals would be considered illegal.
The decision was praised by the Federal Trade Commission (FTC), which has staunchly opposed the settlements it calls “sweetheart deals.” Responding to the committee’s action on the issue, FTC Chairman Jon Leibowitz said, “In the midst of all the Congressional work to reduce the nation’s deficits, I think it’s especially commendable.”
The Generic Pharamceutical Association (GPhA) took an opposite stance, however. Contrary to its name, GPhA officials said, the bill would actually hinder access to generics by applying a blanket ban to generic drugs already on the market. Doing so could force their removal from the market, leaving patients with no option but to switch back to the branded drug until further notice, they warned.
GPhA fiercely defended the settlements, which it argues do not delay generic launches, and said the courts and Congress are on their side. Legislation to ban patent settlements “has repeatedly garnered bipartisan opposition and failed to receive support from the full Congress,” the group stated. “Moreover, the Courts have consistently held that these settlements are pro-consumer and procompetitive.”
Senators Push for More Generics in Medicaid
At a time when many in Washington are calling for cuts to government health programs, a bipartisan group of US senators introduced legislation that promises to lower Medicaid costs without cutting benefits by giving states incentives to encourage the use of generic drugs.
Under the Affordable Medicines Utilization Act of 2011, states that increase their generic utilization rates under Medicaid would be allowed to pocket a portion of the savings generated from switching to lower-cost drugs. The bill was introduced by US Senators Scott Brown (R, MA), Ron Wyden (D, OR) and John McCain (R, AZ) as a way to rein in health care spending.
The legislation passed muster with pharmacy groups and the generic pharmaceutical industry. Teva Pharmaceuticals USA, the GPhA, and the National Association of Chain Drug Stores (NACDS) all issued statements applauding the senators’ leadership.
NACDS President and Chief Executive Officer Steven C. Anderson, IOM, CAE, added that “Community pharmacy has a higher rate of generic dispensing—71%—than any other practice setting.” It has been estimated that for every 1% increase in generic utilization, Medicaid could save up to $809 million.