Generic Drug Utilization Substantially Lessens Medicare Part D Costs, OIG Reports
Projections estimated that the Medicare Part D drug program in 2006 would cost the federal government approximately $59 billion dollars. However, according to a report released just over a week ago by the United States Department of Health and Human Services, Office of Inspector General, actual costs for 2006 came in surprisingly low at $47 billion dollars--that's right--$12 billion dollars less than the estimates.
So, what accounts for the discrepancy?
According to the report, generic drug utilization makes up the difference. Generic drugs cost about 71% less than their brand name equivalents.
The report, entitled "Generic Drug Utilization in the Medicare Part D Program," calculated (1) the overall generic utilization rate, (2) the generic drug substitution rate and (3) the single source drug prescribing rate for the first two quarters of 2006. The results of these inquiries were as follows:
- The overall generic drug utilization rate--the percentage of all prescriptions dispensed that were generics--came in at 56% as compared to 54% for State Medicaid programs in 2004;
- In instances in which generics were available, generic drugs were dispensed 88% of the time, close in comparison to the 89% substitution rate under State Medicaid programs in 2004; and
- The single source drug prescribing rate--the proportion of prescriptions written for drugs that have no generic substitutes--was calculated at 37%, close in comparison to the data for State Medicaid programs in 2004 of 41%.
The report notes that generic drug utilization rates varied among plans and recommends that Part D plans should encourage the prescribing of multisource drugs. While the focus of the report seems to be on cutting costs, the report does acknowledge that "such efforts must be undertaken with caution to ensure that beneficiaries maintain access to appropriate treatment."
