Objectives: To evaluate whether increased placement of generic drugs on higher cost-sharing tiers in Medicare Part D is associated with coverage of multisource brand-name drugs, plan type, or product characteristics.
Study design: Descriptive study of Medicare Prescription Drug Formulary Files.
Methods: We analyzed plan coverage and tiering of brand-name drugs and matched generics from 2013-2019. We compared tiering changes and estimated out-of-pocket spending by tier for all Part D plans and by plan type (Medicare Advantage prescription drug [MA-PD] vs stand-alone prescription drug plan [PDP]) for covered generic drugs. Finally, we identified the generic products commonly placed on higher tiers in 2019 and categorized them based on clinical characteristics.
Results: Across 5,220,488 plan-product combinations in 2019, 76.4% of generic drug observations reflected coverage on Part D plan formularies, compared with only 12.1% of brand-name drugs. Between 2013 and 2019, the share of observations reflecting covered generics on lower tiers decreased from 76.8% to 53.9%, whereas the share on higher tiers increased from 7.5% to 28.0%. MA-PD plans were more likely than PDPs to place generic drugs on lower tiers, even among plan sponsors offering both plan types. Despite these trends, higher tier placement does not appear to be related to more generous coverage of brand-name products. Instead, in 2019, 70% of high-tier generics had multiple formulations, required heightened clinical monitoring, or had head-to-head treatment options available.
Conclusions: Although Part D plans have increasingly placed covered generic drugs on higher formulary tiers over time, this may be partly explained by a drug's clinical profile and availability of substitutes rather than preferred brand-name drug coverage.