Variation in Generic Dispensing Rates in Medicare Part D

Objectives

The use of generics in Medicare Part D generates cost savings for plan sponsors, beneficiaries, and the federal government. However, there is considerable variation in generic use across plans, even within a therapeutic class. Our objective is to understand the extent of variation in generic use in Part D and to understand factors associated with generic use.

Study Design

We used an observational study design using Medicare Part D claims from 2006 to 2016.

Methods

We used descriptive statistics and regression analysis to examine the variation in generic and brand use across plans and the extent to which patient, plan, and area characteristics are associated with the choice of medication within a therapeutic class.

Results

Although generic use has increased markedly over time in Part D, substantial variation across plans persists in a number of common therapeutic classes. Beneficiary characteristics such as gender and health status are associated with higher/lower generic use, as are plan characteristics such as plan type (stand-alone prescription drug plan or Medicare Advantage), premium, and parent company.

Conclusions

Because we cannot study the impact of brand-name drug rebates on generic use, we can study the variation in generic use across Part D plans as an indirect way to assess pharmacy benefit manager and plan incentives. We find circumstantial evidence that, in certain classes, rebates may play a role in influencing brand over generic use, although the exact relationship is unknowable given the proprietary nature of rebates.