If generic drugs are supposed to be a smart cost-saving alternative for patients and health plans, why aren’t they made available more quickly on Medicare Part D formularies?
That’s the key question raised in a September report by the Association for Accessible Medicines, a trade group for manufacturers of generics. It found an average lag of almost three years between FDA approval of the first generic copy of a brand-name medicine and its inclusion on half of all Part D formulas.
The group looked at the period from 2016 through this year’s first five months. In that time, 120 “first generics”—shorthand for the first generic for a particular brand-name drug that gets an FDA OK—were launched. According to the report, 10% to 25% of first generics made it on to Plan D formularies during the first year after their launch; 25% to 35% during the second year, and 55% to 65% in the third. Another way to look at it is with the AAM’s finding that after three years, where Part D formularies were concerned, 40% of first generics were still on the outside looking in.
“This trend harms future generic competition and deprives patients [of] access to lower-priced generic medicines, forcing them to continue to pay for higher-cost brand drugs,” the trade group lamented.
Of course, a first generic does not always mean savings right off the bat becauses other generics typically do not become available for at least six months, and it often takes competition from several products to put downward pressure on prices. Even so, the wait between launch and formulary inclusion runs counter to the widely held belief that generics are embraced by payers as a relatively frictionless way to control drug spending.
Formulary decisions are really important,” says Stacie Dusetzina, an associate professor of health policy at Vanderbilt University, who studies drug pricing. “Those percentages don’t look great. You’d hope to get nearly 100% uptake of a new generic or any generic on formularies.”
The findings land amid the intensifying debate over the cost of prescription medicines. Lawmakers have introduced a flurry of bills in Congress in response to the public outcry from Americans who see drug prices as a key pocketbook issue.
The legislation—and the political momentum behind it—have forced brand-name drugmakers to fight back by spending even more time and money on lobbying on Capitol Hill. It’s a scenario that would seem to play to the advantage of the generics industry, whose whole reason-to-be is competing with the brand-name drugs on price. But concerns about the safety of generics have bubbled up lately. Katherine Eban’s Bottle of Lies, an exposé of the generic drug industry, is a New York Times bestseller.
The association report discusses several other formulary practices that hold back generics besides keeping them off the formulary altogether. The report says, for example, that generics are “consistently” placed on Part D formulary tiers that are usually reserved for brand-name medicines. As a result, seniors have no incentive to use generics because their out-of-pocket costs will be the same as for the brand-name drug.