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Adapted from Dusetinza, et. al, 2019, "Sending The Wrong Price Signal: Why Do Some Brand-Name Drugs Cost Medicare Beneficiaries Less Than Generics?"; Chart: Andrew Witherspoon

Seniors who use generic specialty drugs may end up spending more out-of-pocket than those who use the brand version because of how Medicare's prescription drug benefit is structured, according to a new study in Health Affairs.

The bottom line: "If you need a lot of drugs or some very expensive drugs you would save more money out-of-pocket by using brands instead of generics," tweeted one of the study's authors, Stacie Dusetzina.

Details: The problem is most acute for specialty drugs, which tend to be the most expensive on the market.

  • Branded drug companies pay discounts in Medicare's "donut hole," which count toward that senior's overall out-of-pocket spending. Generics don't, so it takes longer for seniors using those drugs to spend enough for the government to start picking up more of their costs.
  • While Congress fixed the problem for biosimilars (akin to the generic version of biologics) last year, it left traditional small-molecule drugs unaddressed.

By the numbers: Even where competition among drugs is robust, patients whose prescriptions cost between $22,000 and $80,000 per year would save money if they used brand-name drugs instead of generics, the study found.

  • Part D plans may cover either the brand or the generic version of a drug, meaning patients can't switch between them even if they could get a better deal.

What they're saying: "We need to redesign [Part D] to work for people needing high-priced drugs. All of them. And we need to make generics CONSISTENTLY less expensive for patients than brands," Dusetzina tweeted.

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