Illustration: Gabriella Turrisi/Axios
Usage of cheaper generic hepatitis C drugs was lower among Medicare beneficiaries than Medicaid enrollees in 2020, costing seniors thousands of dollars in extra out-of-pocket spending, according to a new HHS Office of Inspector General report.
Why it matters: The report underscores that just because a generic version of a drug exists, patients are not necessarily benefitting from it — and supports arguments that Medicare's prescription drug benefit structure incentivizes insurers to favor brand-name drugs over generics.
Background: Medicare spent billions of dollars on hepatitis C drugs after the introduction of Gilead's Sovaldi, which came to market with a list price of $84,000 per course of treatment. Gilead later introduced a second hepatitis C drug, Harvoni, at a list price of $94,500.
- In 2019, Gilead introduced two generic versions — called authorized generics — in response to affordability concerns.
- Other lower-cost brand options also became available.
What they found: In 2020, uptake of the authorized generics was faster in Medicaid than Medicare, and some Medicare Part D plans didn't even cover them.
- "The lack of coverage may largely explain why so few Medicare beneficiaries received an authorized generic to treat hepatitis C in 2020, and instead so many received the more expensive brand-name version," the IG report stated.
Rebates on the higher-cost drugs lowered Medicare spending overall, but seniors' out-of-pocket costs remained high.
- Seniors without financial assistance paid $2,200 more out-of-pocket for higher-cost hepatitis C drugs than those receiving lower-cost drugs, per the report.
- The program spent $155 million more in catastrophic coverage payments for higher-cost hepatitis C drugs than lower-cost drugs, even though a similar number of seniors were in each group.
The bottom line: "Part D’s programmatic structure may lead to plan sponsors preferring higher-cost versions, resulting in beneficiaries paying thousands more out-of-pocket and nearly double Medicare reinsurance," the report concludes.