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How Can Medicare Save A Billion Bucks? Use Generics

JAMA Study of 1,500 Drugs Crunches the Numbers

In 2016, the cost difference between the amount that the Medicare Part D drug program spent on brand-name combination medications and the estimated cost for generic constituents for the same number of doses was $925 million, according to an investigation in the Journal of the American Medical Association (JAMA).

The JAMA investigation, a retrospective analysis of Medicare drug spending from 2011 through 2016, looked at 29 brand-name oral combination medications, separated into three categories: medications that were available in generic form at identical doses; generic medications available at different doses; and therapeutically equivalent generic substitutes. The savings for all three categories was in the millions of dollars, with the largest discrepancy (an estimated $471 million) seen with the therapeutically equivalent generic substitutes. The authors also found that for the 10 most costly combination products that were available throughout the entire study period, the listed Medicare spending could have been an estimated $2.7 billion lower if the generic constituents had been prescribed.

This study reinforces the long-held notion that promoting the use of generic substitution and therapeutic interchange through prescriber education and more “rational” substitution policies may facilitate substantial cost savings in the Medical drug benefit program.

Source: JAMA 2018; 320(7):650-656.

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