63% of Medicare Beneficiaries Paid Full Generic Drugs Cost in 2020

Under Medicare Part D, more than half of the beneficiaries were liable for paying the entire out-of-pocket cost of their generic prescription drug, according to an analysis from Avalere.

Avalere researchers used 2020 CMS prescription drug event data to uncover the number of enrollees who paid the total cost of a generic prescription while in the initial coverage limit phase of their benefit.

Then, researchers determined the share of enrollees who paid the full cost out of the total number of enrollees who received the generic. 

Over time the number of enrollees held responsible for paying the full cost of generic medication on a preferred brand tier has grown.

In 2017, 45 percent of Medicare Part D beneficiaries paid the total cost of a generic at least once. Three years later, the number of beneficiaries increased by 18 percentage points to 63 percent.

The researchers also found that a greater proportion of thyroid, cardiotonic, antianxiety, and musculoskeletal therapy agents are associated with enrollees paying the entire cost.

In addition, more enrollees in prescription drug plans (64 percent) paid their full prescription drug costs than those with Medicare Advantage prescription drug plans (62 percent).

Similarly, researchers found that 68 percent of those with low-income subsidy benchmark plans paid entire prices compared to 62 percent of those in non-benchmark plans.

Beneficiary cost-sharing in Medicare Part D for a prescription drug is established based on the negotiated price that is agreed between a Part D plan sponsor and the pharmacy, the researchers explained. However, the negotiated price may differ from a manufacturer’s list price.

The Centers for Medicare & Medicaid Services (CMS) policy forbids Part D plans from charging beneficiaries cost-sharing amounts that surpass negotiated prices. Yet, as payers continue to place generic drugs on higher-cost Part D formulary tiers, more enrollees will be held liable for the full costs of their medications.

Out-of-pocket costs are on the rise and Medicare Part D requirements continue to contribute to high out-of-pocket healthcare spending for a growing number of beneficiaries

 In 2019, the number of Part D beneficiaries who exceeded catastrophic drug spending had increased more than three times beyond the number that exceeded catastrophic drug spending in 2010, a Kaiser Family Foundation (KFF) found.

As Medicare Part D drug spending becomes increasingly challenging to control, federal regulations have been proposed to address rising costs.

The Build Back Better Act, introduced in the House of Representatives, includes measures that aim to reduce Medicare Part D drug spending.

The law would allow the federal government to negotiate prices for expensive treatments without generic alternatives, limit cost-sharing for insulin, require Medicare Part D plans to cover ACIP-recommended vaccines for free, and repeal the drug rebate rule.