As Out-of-Pocket Costs Rise, Medicare Part D Beneficiaries Have Limited Access to New Generic Drugs

Access to newly launched generic drugs is far more restricted for Medicare Part D beneficiaries compared to those with commercial coverage, according to a July report from the Association for Accessible Medicines (AAM), a trade association representing generic drug manufacturers. The report analyzed formulary and drug benefit design data from MMIT (AIS Health’s parent company), finding that just over 20% of 2020’s newly launched generic drugs were covered under Medicare formularies in 2021 vs. 66% under commercial formularies. And when Part D plans do cover new generics, they’re far less likely to be placed on a generic tier, as the Coverage Gap Discount Program (CGDP) incentivizes payers to prefer brand drugs. Meanwhile, the Kaiser Family Foundation (KFF) reported that the influx of new, expensive drugs coming to market is causing an ever-increasing number of Part D beneficiaries to hit the catastrophic threshold, with cumulative beneficiary spending from 2010 to 2019 reaching nearly $10 billion. Researchers suggested several reforms that could help mitigate these issues. The KFF report advocated for adding an out-of-pocket (OOP) spending cap to Part D, while AAM proposed eliminating the CGDP, decreasing payer cost-sharing for generics and biosimilars and allowing for the creation of generic specialty tiers.

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