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MANAGED CARE July 2013. © MediMedia USA
The Formulary Files

Part D’s underuse of generics wastes $1B per year

Medicare Part D and the Department of Veterans Affairs (VA) are two major government payers of health benefits that use different approaches to managing prescription drug benefits, and a study that looked at managing brand-name prescription drugs shows a vast difference in efficiency.

Walid F. Gellad, MD, MPH, and colleagues reviewed brand-name diabetes medication use by Medicare beneficiaries and by a corresponding group of veterans ages 65+, all with diabetes.

“Use of brand- name drugs for Part D beneficiaries for these medications was two to three times higher than VA patients,” says Gellad, a physician and researcher at the VA Pittsburgh Healthcare System and the University of Pittsburgh.

Part D beneficiaries were more likely to use brand-name rather than generic oral hypoglycemic agents (35% vs. 13%), statins (51% vs. 18%), angiotensin-converting enzyme (ACE) inhibitors or angiotensin-receptor blockers (ARBs) (43% vs. 21%), and insulin analogues (75% vs. 27%) than their VA counterparts.

“We can look at the rates of generic use in the VA and use that as a benchmark. We should be able to take care of patients with diabetes using fewer brand-name agents and still maintain high quality care. I think most clinical executives know that, but here’s a concrete example of a system in which we can take good care of these patients with many fewer brand-name drugs — there’s incredible cost savings associated with that,” says Gellad. The researchers found that if Medicare were to use the same percentage of generic antidiabetes drugs as the VA, it would save $1 billion in a year.

That billion-dollar savings is within Medicare‘s reach, too. “What’s most amazing is that we don’t have to talk about whether Medicare has to negotiate drug prices — we don’t have to talk about prices of brand-name drugs at all,” says Gellad. He concedes that obtaining the savings might be easier said than done, “but it doesn’t require changing any law; it simply requires that patients be prescribed fewer brand-name drugs.”

The results show that providers can push generic rates a lot higher and maintain high-quality care. “There’s a lot to learn from the VA in how to manage a prescription drug system, which can be applied to the private sector,” says Gellad. “We all have limited resources, and we can maintain high quality care with fewer brand-name drugs.”

Prescription spending and projected spending if use of brand-name drugs should change in 4 drug groups. Patients had diabetes, were age 65+, and were in Medicare Part D in 2008.

Prescription spending and projected spending: Medicare Part D vs. VA

Source: Gellad WF, et al. Brand-Name Prescription Drug Use Among Veterans Affairs and Medicare Part D Patients With Diabetes: A National Cohort Comparison. Ann Intern Med. 2013 Jun 11. [Epub ahead of print] Available at http://tinyurl.com/q4tlmdt . Permission to use granted by Annals of Internal Medicine.