PCMA-Commissioned Data Finds for Each Percentage Increase in Generic Drug Use, Medicare Part D Spending Falls by $12 Billion

(Washington, DC)—New data released today by the Centers for Medicare & Medicaid Services (CMS) showing generic-drug utilization exceeding 60 percent in Medicare Part D underscores the role of pharmacy benefit managers (PBMs) in expanding access to lower cost, clinically proven prescription drugs. PCMA is the national association representing America’s pharmacy benefit managers (PBMs), which lower the cost of prescription drugs for more than 200 million Americans with coverage provided through Fortune 500 employers, health insurers, labor unions, and Medicare Part D.

“The high generic dispensing rate in Medicare Part D â?? after only one year â?? is a testament to the collaborative efforts of patients, clinicians, PBMs, and policymakers to expand access to clinically proven, cost-effective prescription drugs,” said PCMA President Mark Merritt. “Increased generic drug utilization is helping to keep Part D premiums and program costs lower than originally forecast and is helping to prevent seniors from falling into the ‘donut hole’ coverage gap.”

In recent months, numerous data have shown the important role that increased use of generic drugs can play in lowering health care costs. A recent analysis from PricewaterhouseCoopers examined the role of generic drugs in lowering Part D spending:

• For each percentage point increase in overall generic utilization, Part D drug spending falls by an estimated $12 billion over the 2007 to 2015 period.
• If Medicare prescription drug plans were able to increase generic dispensing rate by 5 percentage points, savings could increase by $58 billion over the 2007 to 2015 period.

In addition, a recent report authored by researchers from CMS found that competition from generic alternatives and other proven management tools utilized by PBMs helped contribute to prescription drug-spending growth rate in 2005 slowing to its lowest growth rate in over a decade, rising just 5.8 percent.

PCMA also believes these data serve as a timely reminder to policymakers about the need to expand access to generic drugs, including providing a clear regulatory pathway for follow-on “biogeneric” drugs and eliminating unnecessary hurdles which limit or delay generic market entry.

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PCMA is the national association representing America’s pharmacy benefit managers (PBMs), which lower the cost of prescription drugs for more than 200 million Americans with coverage provided through Fortune 500 employers, health insurers, labor unions, and Medicare Part D

Contact Information:
Phil Blando, 202-207-3614
Charles Coté 202-207-3605