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Original Investigation
August 21, 2018

Medicare Spending on Brand-name Combination Medications vs Their Generic Constituents

Author Affiliations
  • 1Program on Regulation, Therapeutics, and Law, Division of Pharmacoepidemiology and Pharmacoeconomics, Department of Medicine, Brigham and Women’s Hospital and Harvard Medical School, Boston, Massachusetts
JAMA. 2018;320(7):650-656. doi:10.1001/jama.2018.11439
Key Points

Question  What is the annual incremental cost to the Medicare Part D drug benefit program of using brand-name combination products instead of their generic components?

Findings  In this retrospective analysis of Medicare Part D expenditures, the difference between the amount Medicare reported spending in 2016 on 29 brand-name combination products and the estimated spending for their generic constituents for the same number of doses would have been $925 million, which includes $235 million if generic products had been prescribed at the same doses, $219 million using generic substitution at different doses, and $471 million from substitution of similar generic medications in the same therapeutic class.

Meaning  Generic substitution and therapeutic interchange may offer important opportunities to achieve substantial savings.

Abstract

Importance  Brand-name combination drugs can be more expensive than the sum of their components, especially when the constituent products are available as generic medications. The potential savings that could be achieved using generic components is not known.

Objective  To estimate the additional cost to Medicare of prescribing brand-name combination medications instead of generic constituents.

Design, Setting, and Participants  Retrospective analysis for 2011 through 2016 using the Medicare data set of Part D beneficiaries prescribed any of the 1500 medications that accounted for the highest total spending in 2015. Brand-name combination drugs that had identical or therapeutically equivalent generic constituents were included.

Exposures  Brand-name, oral combination medications with constituents available either as generic drugs or therapeutically equivalent generic substitutes.

Main Outcomes and Measures  The estimated difference between the amount spent by Medicare on brand-name combination drugs and the estimated amount that would have been spent on substitutable generic components.

Results  Among the 1500 medications evaluated, 29 brand-name combination medications were separated into 3 mutually exclusive categories: constituents available as generic medications at identical doses (n = 20), generic constituents at different doses (n = 3), and therapeutically equivalent generic substitutes (n = 6). For the constituents available as generic medications at identical doses category, total spending by Medicare in 2016 on the brand-name combination products was $303 million and the estimated spending for the generic constituents would have been $68 million, which is an estimated difference of $235 million. For the generic constituents at different doses category, total spending by Medicare in 2016 on the brand-name combination products was $232 million and the estimated spending for the generic constituents would have been $13 million, which is an estimated difference of $219 million. For the therapeutically equivalent generic substitutes category, total spending by Medicare in 2016 on the brand-name combination products was $491 million and the estimated spending for the generic constituents would have been $20 million, which is an estimated difference of $471 million. In 2016, the estimated spending for the generic constituents for these 29 drugs would have been $925 million less than the estimated spending for the brand-name combinations. For the 10 most costly combination products available during the entire study period, the listed Medicare spending could have been an estimated $2.7 billion lower between 2011 and 2016 if the generic constituents had been prescribed.

Conclusions and Relevance  In 2016, the difference between the amount that the Medicare drug benefit program reported spending on brand-name combination medications and the estimated spending for generic constituents for the same number of doses was $925 million. Promoting generic substitution and therapeutic interchange through prescriber education and more rational substitution policies may offer important opportunities to achieve substantial savings in the Medicare drug benefit program.

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