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In a recent proposed rule, CMS outlined concerns that issuers of qualified health plans (QHPs) through Federally-facilitated Exchanges and State-based Exchanges on the Federal platform may not be including generic drugs on appropriate cost-sharing tiers for the standardized plan options.
Increasingly, lower cost generic drugs are being placed onto brand drug tiers with much higher patient cost sharing, and in some cases, generics are not being added to formularies at all. The result of such practices is higher out-of-pocket costs at the pharmacy counter for patients who historically have accessed and benefited from lower-cost generics. Such tiering practices can also translate to minimal utilization of certain generics, which could have a chilling effect on decisions to invest in development of new generic medicines, particularly for complex medicines.
A recent Avalere study showed that Part D beneficiary spending on generic drugs increased by more than $11 billion (more than 135%) from 2011 to 2019 – with the increase largely driven by plan and PBM decisions to place generics on non-generic formulary tiers, even as the prices for those generics declined1. Further, a July 2022 analysis published by Avalere showed that as Part D plans continue to place generics on brand formulary tiers, more patients are liable for the full cost of their medication, though they were previously paying a generic tier co-payment. Avalere found that in 2020, 63% of beneficiaries (an 18% increase from 2017) across all Part D plans paid the full cost of a generic at least once.2 Many QHPs have similarly employed such formulary practices, resulting in higher out-of-pocket costs at the pharmacy counter for their enrollees.
As such, Viatris submitted comments urging CMS to finalize the proposal to specify that issuers of standardized plan options must: (1) place all covered generic drugs in the standardized plan options’ generic drug cost-sharing tier and (2) place brand name drugs in either the standardized plan options’ preferred brand or non- preferred brand tiers. Under such a policy, drug tiers would no longer mix generics with brand products. The policy, if finalized, will encourage greater access to more affordable generics and lower patient out‐of‐pocket costs.
1. Avalere, “New Analysis of Trends in Part D Generic Tiering, Pricing, and Patient Spending,” Sept. 14, 2022, available online at: https://avalere.com/insights/new-analysis-of-trends-in-part-d-generic-tiering-pricing-and-patient-spending.
2. Avalere, July 12, 2022 “Some Medicare Part D Beneficiaries Pay Full Price for Generic Drugs”. available online at https://avalere.com/insights/some-medicare-part-d-beneficiaries-pay-full-price-for-generic-drugs