Coverage and Out-of-Pocket Spending on Brand versus Generic/Biosimilar Specialty Drugs in Medicare Part D

Tuesday, June 12, 2018: 8:20 AM
1000 - First Floor (Rollins School of Public Health)

Presenter: Stacie Dusetzina

Discussant: Marta Wosinska


Background: Generic price competition has historically been a successful strategy for lowering US prescription drug prices. However, whether generic competition will continue to be effective for lowering payer and patient out-of-pocket prices for specialty drugs and biologics is unclear. Under Medicare Part D the Affordable Care Act included provisions aimed at closing the “doughnut hole” by incorporating reduced patient cost-sharing from 100% in 2010 to 25% in 2020. They achieve this, in part, by a 50% manufacturer discount for branded products, which is credited towards patient out-of-pocket spending on branded drugs. No such credit exists for generic products. In this paper we compare price reductions and expected out-of-pocket spending for Medicare Part D enrollees for three brand-generic/biosimilar pairs to estimate potential savings for patients using generic/biosimilar products over branded counterparts: a small molecule product for treating high cholesterol (Crestor / rosuvastain – generic approval in 2016); a small molecule specialty drug for cancer (Gleevec / imatinib – generic approval in 2015); and the first biologic drug approved in the US for neutropenia (Neupogen / zarxio – biosimilar approval 2015).

Methods: We used the Medicare Prescription Drug Plan Formulary, Pharmacy Network, and Pricing Information Files from the Centers for Medicaid and Medicare Services for Q3 2016. We analyzed 897 stand-alone and 1,920 Medicare Advantage Prescription Drug formularies. We identified selected orally or self-administered medications and summarized drug prices at the point of sale (median amount paid by patients and plans to the pharmacy, excluding post-sale rebates) and estimated out-of-pocket spending for beneficiaries filling 12 months of therapy. To ensure comparable estimates across products we limited to a 30-day supply of therapy and a standard dose: 0.8ML/480mcg for Neupogen/zarxio; 400MG for Gleevec/imatinib; 20MG for Crestor/rosuvastatin. We estimated spending based on actual formulary coverage and separately assuming that brand and generic drug users paid only 25% coinsurance in the coverage gap (to reflect expected changes to the Part D benefit in 2020).

Results: Median monthly prices and interquartile ranges (IQR) were $250($20) and $61($30), Crestor/rosuvastatin; $10,152($161) and $8,661($611), Gleevec/imatinib; and $5,187($78) and $4,547($64), Neupogen/zarxio. When considering coverage across all Part D formularies, 95.6% and 52.4% covered Crestor/rosuvastatin; 67.1% and 81.0% covered Gleevec/imatinib; 96.2% and 57.2% covered Neupogen/zarxio.

For plans covering products, estimated annual out-of-pocket spending was $492 lower for generic rosuvastatin versus Crestor ($281 versus $774 per year). Out-of-pocket spending was $1,056 higher for generic imatinib versus Gleevec ($9,573 versus $8,517) and $1,567 higher for the biosimilar zarxio versus Neupogen ($7,105 versus $5,538).

Discussion: Generic competition and biosimilar entry in the specialty drug context may be less effective at reducing drug prices and patient out-of-pocket spending than anticipated. Fewer generic entrants and incentives for branded drug use within the doughnut hole are likely key contributors. Limitations include limited follow-up time and the inclusion of only three brand/generic/biosimilar comparators. Additionally, point-of-sale prices do not include rebates, although we expect rebates to be used primarily for branded rather than generic products. Future work should expand the list of considered products.