New York Estate Planning & Elder Law Blog
A recent analysis of generic drug prices paid by Medicare Part D enrollees by healthcare consulting firm Avalere Health determined that despite the relatively stable prices of these medications, some seniors find themselves paying more and more each year. The reasons, according to the report, have to do with the way insurance companies place enrollees into pricing tiers and the lack of policy changes to curb higher out of pocket costs for elders.
As reported by Avalere, insurance companies have been moving many generic drugs into copay tiers requiring patients to pay larger portions of the drugs’ cost, thus shifting more costs onto patients this way and keeping Part D premiums stable. The moves are important to insurance companies because they understand enrollees decide on their Medicare Part D plans based on the price of the premiums. Unfortunately for patients, they do not realize the full costs of their healthcare plans until they start filing prescriptions.
The numbers on just how much Part D enrollees are paying for their generic drugs is quite staggering. Despite the average prices of generic drugs increasing by on 1 percent from 2011 to 2015, total out of pocket costs increased by $6.2 billion, or 93 percent. Unfortunately, some of the drugs subject to these massive upcharges include some of the most widely prescribed and low cost medications for chronic conditions such as cholesterol, hypertension, and diabetes.
When Medicare Part D originally began in 2006, most insurance companies offered four different price tiers for enrollees to choose from. One generic tier with the lowest co pays, two for name brand drugs, and a “preferred” and “non-preferred,” and a top tier for specialty drugs like biopharmaceuticals. Non-prefered prescriptions are those considered not to be part of the insurance company’s standard formularies and therefore incur higher out of pocket fees from enrollees.
Avalere’s study found that in 2011, insurance companies placed 71 percent of covered generic drugs into their Part D tier 1, the lowest, carrying the smallest co pays. However, by 2015 those numbers shifted to just 19 percent of generic drugs in Part D’s tier 1 while 46 percent migrated to tier 2, and 35 percent were placed in tier 3 or higher. The study concluded that in order to thwart the trend, the Centers for Medicare and Medicaid Studies (CMS) will need to take certain policy steps to ensure seniors continue taking their generic medications to help prevent more serious health problems from occurring.