The panel also heard about industry issues beyond Part D, including the biologics exclusivity period, which will impact the overall availability of generic drugs and the ability to substitute similar drugs as well as the shortage of some key prescription drugs, which in many cases have been linked to the supply chain of generic medications.
Besides its release of the report, the committee called on the Government Accountability Office to examine the reasons behind recent price increases for certain generic drugs which haves been on the market for years. The issue of generic drug price spikes has also attracted attention from the Justice Department and the Senate Committee on Health, Education, Labor and Pensions subcommittee on primary health and aging.
Specifically, the report outlines a series of policy recommendations that include finding innovative ways to expand generic drug usage among low-income subsidy (LIS) beneficiaries; increasing education of beneficiaries and health professionals on the safety, effectiveness and cost benefits of generic medications; and improving investigations of questionable pharmacy billing practices that thwart efforts to incentivize generics.
“We need to do everything we can to boost drug saving for beneficiaries and taxpayers,” said committee chairman Sen. Bill Nelson (D., Fla.).
The panel’s ranking member, Sen. Susan Collins (R., Maine), pointed out that although the use of generic drugs has increased over time, more can be done to encourage appropriate use of generics in an attempt to keep rising drug costs in check.
“For example, greater attention should be given to educating Medicare beneficiaries and health care professionals about the efficacy of generic drugs and encouraging them to select generic drugs instead of brand name drugs, when appropriate,” commented Collins.
On average, the retail price of a generic drug is 75% lower than the retail price of a brand name drug. A 2010 Congressional Budget Office (CBO) report estimated that the use of generic drugs in the Part D program saved beneficiaries and taxpayers $33 billion in one year alone.
The committee’s findings were part of a two-year review that analyzed drug plan formularies, pharmacy billing, physician prescribing practices and plan sponsor programs to incentivize generics use.
“GPhA applauds the new findings of the Senate committee and welcomes further conversation on increasing generic drug utilization in government programs, particularly Medicare Part D. Indeed, as the report, ‘Medicare Part D Prescription Drug Benefit: Increasing Use and Access of Affordable Prescription Drugs,’ states, competition from generic drugs translates into real savings for taxpayers and beneficiaries. Additionally, the analysis points to the role of generics in slowing health care spending growth and boosting medication adherence, underscoring that generic drugs play a critical role in patient savings and also put safe, more affordable drugs within reach for millions of Americans,” said a statement issued on behalf of Generic Pharmaceutical Association (GPhA) president and chief executive officer Ralph Neas.
Joining numerous studies, including a recent Centers for Medicare & Medicaid Services report, the Senate analysis underscores that generic drugs are instrumental in lowering health care costs in Medicare but that there is still unrealized potential for even greater savings.
For example, CBO estimates show that changing Part D LIS cost-sharing policies to improve generic utilization could save the federal government $24.2 billion over 10 years while improving access for its beneficiaries.
Neas said that GPhA “is hopeful” that among the health care issues that Congress will address in 2015 is what he characterizes as the misuse of programs designed to protect patient safety, such as Risk Evaluation and Mitigation Strategies (REMS).
“These tactics cost the U.S. health system $5.4 billion, according to Matrix Global Advisors. That is why the association supports the bipartisan Fair Access for Safe and Timely (FAST) Generics Act, introduced by Reps. Steve Stivers (R., Ohio) and Peter Welch (D., Vt.), which would limit brand drug company maneuvers that misuse REMS and thwart competition from more affordable generics,” said Neas.
According to the December Senate report, the Medicare Payment Advisory Committee (MedPAC) concluded in its own analysis that although prices of individual Part D prescription drugs grew by an average of 23% between 2006 and 2010, Part D drug prices — when accounting for generic substitution — grew over the same time by an average of just 2%.
Furthermore, the most recent Medicare trustees report found that generic drug use accounted for 84% of all Part D drug use during 2013, up three percentage points from the year before.