Feb 15, 2022
Drop in Generic Medications Covered by Medicare Part D
57% of Generic Drugs Are Not on 2022 Part D Generic Tiers
With Medicare Part D, prescriptions are covered based on their formulary tier, meaning drugs on lower tiers will have a lower copay than medications on higher tiers.
An example* of Medicare Part D tiers:
Tier 1- Preferred Generics/lowest copay
Tier 2- Generics
Tier 3- Preferred Brands
Tier 4- Non-Preferred
Tier 5- Speciality drugs
*Formulary tiers depend on plan
An updated analysis published by Avalere reveals that Medicare Part D's plan tier placement of generic prescription drugs continues to decrease for the third year in a row. In fact, the percentage of generic medicines active on Part D formulary tiers is down to 43% in 2022, compared to 53% in 2019.
Avalere's study also found that Medicare Part D plans have the flexibility to develop drug formularies and structure tiers provided they meet the guidelines set by the Centers for Medicare & Medicaid Services (CMS).
The CMS formulary policy gives drug plans the ability to include many generic medications on Tier 4 as long as they replace the" non-preferred brand" tier with a "non-preferred drug" tier.
Higher tiers = higher out of pocket costs
As the number of generic medications placed on non-generic tiers increases over time, so does the copay for patients at the pharmacy counter.
However, this rise in out-of-pocket expenses brings confusion as generic drug prices continue to decrease overall. The Medicare Payment Advisory Commission reported that the average cost of generic prescriptions decreased by 13.7% from 2006 to 2018 and another 11% from 2018 to 2019.
These numbers prove that the tier placement of generic medications is not associated with increases in prices.
What's driving plan tier decisions?
With 57% of covered generic medications being placed on non-generic tiers in 2022, many people are wondering why this is. The answer might be as simple as Medicare Part D trying to stay competitive while managing the increase of brand prescription costs.
By having patients pay more out-of-pocket for generics, Plan D can lower their overall costs. As a result, one can assume Plan D plan subscribers aren't getting the full value from their Medicare benefits.
What is Medicare Part D?
The difference between Part B and Part D
Medicare Part B tends to cover things like vaccinations, injections, infusions, and medical equipment used at home. Part D on the other hand, covers a more comprehensive range of prescription medications.
What to do if you can't afford your medications
At CareCard, we are passionate about helping make your medication payments more affordable, saving members up to 85% on prescription drugs. Learn how CareCard can help make your medication payments more manageable.