Medicare

Generic medicines are an integral component of America’s pharmaceutical care system, driving substantial savings to patients and public programs. Even as spending on prescription drugs continues to rise in public programs, the use of generic medicines has blunted increasing brand drug prices, generating savings of $293 billion in 2018 alone. In fact, the average price of generic drugs covered under Medicare Part D in 2017 was only 26% of their average price in 2006.

The unabated high cost of prescription medicines in America has prompted a public outcry for solutions from state and federal policymakers as well as health care leaders. Meanwhile, FDA-approved generic medicines continue to generate competition for more expensive brand drugs and reduce costs for America’s patients for 35 years running. Generic drugs are a core component to lowering drug spending, and the use of generic medicines saved $313 billion in 2019 alone.

The Medicare Part D program has offered prescription drug coverage through private plans that actively manage prescription drug benefits through the creation of formulary tiers and cost-sharing. In 2019, CMS proposed restricting plans’ ability to place generic drugs on non-generic tiers. In this analysis, Avalere estimates the implications of CMS’ potential new requirement on beneficiary cost-sharing, plan liabilities and the implications for plans’ share of total costs for beneficiaries.