Analysis: Restricting Medicare Part D Generics to Generic Coverage Tiers Could Save Patients Billions

March 13, 2019

A proposed Centers for Medicare & Medicaid Services requirement that Medicare Part D plans place generics only on generic formulary tiers could have lowered patients’ drug costs by almost $16 billion over a three-year period, according to an analysis by healthcare consulting firm Avalere.

Under Medicare Part D benefit design requirements, beneficiaries typically pay more cost-sharing for drugs placed on Tiers 3 and 4, the tiers for branded drugs, than on Tiers 1 and 2, the tiers for generic drugs. Placing generic drugs on higher, non-generic tiers can increase patient cost-sharing for such medications, according to the consulting firm.

A previous Avalere analysis of 2011-2015 plan data found plans were increasingly placing generic drugs in tiers 3 and 4. The analysis found that the number of generics placed in tier one declined 53 percent, which led to a 93 percent increase in total patient cost-sharing for the drugs.

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