For decades, generic drugs were an effective and less costly option for patients, but new changes in the market are making it more difficult than ever for generics and biosimilars to successfully compete on formularies.
“Generics are a threatened species right now and that goes double for biosimilars,” says Louis Tharp, executive director and co-Founder of the Global Healthy Living Foundation and CreakyJoints.
Experts note a significant shift in the marketplace that has led to more generic drugs getting placed on higher formulary tiers—significantly increasing copay amounts for patients. Branded manufacturers also deploy a series of strategies, such as the use of rebates, to try to limit the reach of new generic products.
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“Generally, what we have been observing and hearing from members are increasing challenges in terms of formulary access, both with respect to older commoditized generics and newer generic launches,” says Craig Burton, vice president of policy for the Association for Accessible Medicines.
Fewer Generic Drugs on Tier 1
Research has shown a significant drop in the number of generic medications being placed on the lowest formulary tiers in recent years. Some believe the trend is driving up patient costs and making it increasingly difficult for generics to compete.
According to a recent Avalere survey examining Medicare Part D trends of generic drugs, researchers found that in 2011, 71% of generic drugs were placed on tier 1; but by 2015, only 19% of covered generic drugs were placed on tier 1. It was much more likely in 2015 that generic drugs would be placed on tier 2 (46%) or tier three or higher (35%).
This 53% drop in the number of drugs placed on the lowest tier also translated to a $6.2 billion increase in the total patient cost sharing for the same drugs.
One potential reason for the significant jump in patient cost-sharing could have been attributed to increased utilization; however, Avalere found that during this time period utilization only increased by about 20%. In addition, the price of generic drugs assessed only increased by 1% during the same period.
“The result was pretty clear—this is simply plans shifting generic drugs to tiers with higher copays, mixing them in on branded drug tiers with higher copays and seniors not receiving the full value of those generics,” Burton says.
Just this year, Avalere released a new analysis of Medicare Part D generic trends and found that between 2016 and 2019, generic drugs were placed on the lowest tier 14% of the time.
Burton says since research seems to indicate that the trend of placing generic drugs on branded tiers with higher copays does not appear to be driven by the price of generics, the association has had to consider other possibilities for the change in practices.
The emerging assumption is that higher brand drug costs are driving greater co-pays across the board, he says.
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