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Posted: September 30, 2008

Seniors Lean More to Generic Drugs Only When They?re Paying: Study

The use of generic drugs among our elderly population depends on who’s paying, according to an industry study that found seniors ordering low-cost generics when they pay but going with more expensive name brands when Medicare is paying.

As a result, the federal government’s cost of running the Medicare Part D prescription drug plan is higher than it might otherwise be, according to the study conducted by Medco Health Solutions, which manages drug benefits for approximately 20% of all Americans. Drug benefit managers receive higher compensation for their work when consumers use generics, which can cost up to 80% less than branded drugs.

Medco examined spending habits for medications acquired by seniors under the Part D benefit in 2007 in reaching its conclusions. Its announcement used, as an example of the situation, what it found with respect to cholesterol medications.

Medco said it found seniors battling high cholesterol more likely to stop taking their medications once they reached the Medicare Coverage Gap – or the so-called “donut hole” in Part D coverage -- and thereby put themselves at higher risk for heart attack and stroke.

Medco said Medicare beneficiaries prescribed cholesterol lowering statins are nearly twice as likely to abandon their cholesterol-fighting medications when they reach the “donut hole,” and become responsible for paying the entire cost of their medications, than they are in the initial phase of the benefit when medication costs are covered. Statins have been shown as beneficial in reducing the risk of heart attack and stroke for patients with high cholesterol.

In addition, Medicare Part D recipients prescribed branded cholesterol-lowering statins were most at risk, according to the Medco report, since they are more likely to stop taking their medications than those using a generic drug. The study shows that during 2007, the rate of patients who suspended generic statin treatment was 20% lower than those on a brand-name medication.

"This research confirms the concerns related to patient health in the Coverage Gap, and also validates the positive impact generics have on helping patients remain compliant with their medications," said Dr. Woody Eisenberg, chief medical officer of Medco Retiree Solutions.

Meanwhile, the federal Centers for Medicare and Medicaid Services said the agency could not confirm the Medco findings.

According to the Medco research, which included non-low income subsidy beneficiaries across all phases of the Medicare benefit in 2007, 22% of recipients reached the “donut hole” by July 2007, and by December 2007 exactly half were either in the non-coverage Gap or had such high costs that they had already entered a catastrophic coverage phase of the benefit.

During 2007, the Medicare Part D Coverage Gap took effect when beneficiaries' total drug costs reached $2,400. Beneficiaries were then responsible for paying 100% of their drug costs until total costs reach $5,451, when catastrophic coverage begins to cover 95% of a beneficiary's drug costs.

The analysis also revealed that reaching the Coverage Gap had a huge effect on seniors switching to generics, presumably because of the out-of-pocket costs they incur. During the initial phase of the benefit, when the plan provides drug coverage, a third of the medications used daily by beneficiaries were generics and two thirds were brand-name drugs. Once beneficiaries reached the Gap and were responsible for the full cost of the drug, Medco said those numbers flipped, with generics used 71% of the time and branded 29%.

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