The difference in spending by Medicare on brand-name combination medications and the cost of the equivalent generic constituents was an estimated $925 million for 2016, according to results of a study published in JAMA. Additionally, a cumulative savings of $2.7 billion was calculated from 2011 to 2016.
Investigators of this retrospective analysis sought to estimate the additional cost of prescribing brand-name combination medications compared with the lower cost of using generic constituents among Medicare Part D beneficiaries.
The researchers used the publicly available Medicare Part D Prescription Drug Event data set to extract 1500 medications with the highest reported spending in 2015. The investigators identified all brand-name fixed-dose combination drugs that had identical or therapeutically equivalent generic constituents available on the market. For each brand-name combination drug, the constituents were defined and a claim-weighted mean price per unit was calculated. Furthermore, the change in mean price between 2011 and 2016 for each combination product was calculated.
Of 1500 medications, 29 brand-name combination medications met inclusion criteria and were divided into 3 different categories: constituents available as generic medications at identical doses (n=20), generic constituents at different doses (n=3), and therapeutically equivalent generic substitutes (n=6). The estimated cost difference of the 20 brand-name combinations that had constituents available as generic medications at identical doses was $235 million. For the 3 brand-name products with generic constituents at different doses, the estimated cost difference was $219 million, and for the 6 products with therapeutically equivalent generic substitutes, the difference was $471 million. The overall estimated difference in the cost of brand-name vs generic drugs for the same number of doses was a total of $925 million in 2016. The investigators further estimated a cumulative savings of $2.7 billion if generic constituents had been substituted for brand-name prescriptions by Medicare during the period between 2011 and 2016.
Limitations of the analysis included prohibited data on rebate amounts for individual drugs and prices that were based on average-weighted price by dose, so identical doses could not be distinguished. Finally, the investigators assumed that substitution of generic constituents was applicable in all cases; however, some patients may have legitimate clinical reasons for using a specific brand-name drug over its therapeutic equivalent.
“Promoting generic substitution and therapeutic interchange through prescriber education and more rational substitution policies may offer important opportunities to achieve substantial savings in the Medicare drug benefit program,” the researchers concluded.
Sacks CA, Lee CC, Kesselheim AS, Avorn J. Medicare spending on brand-name combination medications vs their generic constituents. JAMA. 2018;320(7):650–656. doi: 10.1001/jama.2018.11439.