Medicare takes years to put new generic drugs on its formulary, study finds

Medicare takes much longer than private insurers to cover new generic drugs, according to a Nov. 21 report from the generic drug lobbying group Access for Affordable Medicines cited by Bloomberg.

According to the study, only 22 percent of generic drugs are covered by Medicare plans during their first year on the market, compared to 46 percent by private insurers. After three years on the market, still only about half of generics are added to Medicare plans.

The study indicates that seniors may be overpaying for drugs.

A separate AAM study cited by Bloomberg said seniors could be paying as much as $4 billion a year on out-of-pocket costs because of Medicare's slow uptake of generics.

Generics are intended to be low-cost alternatives to brand name drugs. Medicare's lag in adding generics to prescription plans is a symptom of a deeper problem with the rebate system that makes brand name drugs more appealing to insurers, according to Bloomberg.

The lag in adding generics to Medicare plans might be partly due to a recent policy shift that placed generics in direct competition with brand name drugs that come with higher rebates for pharmacy benefit managers. Brand name drugs could actually cost less for PBMs but leave Medicare beneficiaries with higher copays.

Cathryn Donaldson, a spokesperson for America's Health Insurance Plans, told Bloomberg that generics often don't come at low enough prices to make a meaningful difference in costs for beneficiaries. The group also argued that if drug plans were forced to put generics on a specific tier of a drug plan, prices would rise for all consumers.

Read the full article here.

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