The Association for Accessible Medicines (AAM) recently mentioned a report titled “Study: 57 Percent of Covered Generic Drugs Not on Part D Generic Tiers in 2025” (here), conducted by Avalere, that raises serious questions regarding the Centers for Medicare and Medicaid Services (CMS) placement of many generic drugs on higher tiers, which are usually reserved for brand-name products and specialty drugs in the Medicare Part D program, forcing beneficiaries to pay higher prices for their medications. A reevaluation of the process is needed to save both patients and the government what could be billions of dollars.
The figure below, taken from the Avalere analysis, “examines tier placement from PYs [Plan Years] 2016-2025 and finds that Part D plan sponsors continue placing covered generic drugs on non-generic tiers, specifically shifting generic drugs onto the non-preferred tier.”
The study summary notes that “Over time, the percentage of generic prescription drugs placed on Medicare Part D generic tiers has declined, from 65% in 2016 to 43% in 2025.” The differential in copay, depending on which tier the generic is placed in, can make a significant difference to the patient. Avalere notes that “[F]or plan year (PY) 2025, the average coinsurance is $1.74 for drugs on preferred generic tiers and $6.21 for drugs on generic tiers. Higher tiers have coinsurance ranging from 21% to 40%.” The question is, why is it that generics, once they are approved, are not immediately placed on generic tiers? Seems like a no-brainer to me, but tier placement appears to be based on some archaic rules that have been difficult for the public (and me) to understand.
The cost savings from the use of generics and biosimilars are well documented, and the historic decreases in drug costs after generic approvals are more than obvious. But the CMS system that places bioequivalent copies of duplicate versions of brand-name medicines on generic tiers takes too long once generics are approved, and placing them on non-generic tiers makes little sense. While these decisions may be based on contracts, rebates, or other obstacles that place generics on brand-name tiers, something needs to change. Want to save tax money and keep Part D affordable for Medicare beneficiaries? Revise the CMS system to require placement on generic tiers as soon as generics hit the market. This seems to be a rather simple concept. Can someone explain why it hasn’t happened?
