The Med Diva

An insider's guide to Medicare Part D and more

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Medicare Drops the Ball on New Mail-Order Pharmacy Rule for Part D Members

Medicare drops the ball on seniors

I recently posted two articles about a new Medicare Part D rule that affected beneficiaries who get their medications delivered on a regular basis from a mail-order pharmacy. The rule, which went into effect on January 1, required all pharmacies with home delivery services to get direct consent from Part D plan members before shipping each and every medication.

Today I have some good news to share: The enlightened folks at Medicare have decided that — surprise, surprise — this new rule did not work as intended. Last week, much to our relief, the Centers for Medicare & Medicaid Services (CMS) rescinded the rule.

Full details are still pending, but as of now, you do not need to give your pharmacy permission to ship the medications you regularly receive by mail. It’s probably not quite as simple as this, so if I hear more, I’ll let you know.

If you’re still not familiar with the rule I’m referring to, I’m not surprised. Medicare did a very poor job communicating the details of the rule with Part D plans and beneficiaries.

In a nutshell, the rule required pharmacies to get consent from the plan member (by phone or online) every time the member’s doctor submitted a new prescription or a refill on an existing prescription was ready to be shipped. If the pharmacy didn’t get the member’s consent, it could not ship the medication. No consent, no medication. Period.

As soon as I heard about this rule back in November, I knew it was a recipe for disaster. This rule, I thought, had the potential to create a serious safety issue for seniors and other Medicare beneficiaries. I was right.

Without guidance and communications from Medicare, Part D plans and their members were left in the dark. I tried to provide clear information about the rule for our plan members, but even I found it too complicated to fully understand and explain.

By the first week of March – just two months after the rule went into effect – hundreds of thousands of prescriptions were being held up in mail-order pharmacies throughout the country. Medicare beneficiaries didn’t receive the medications they needed because they didn’t know about the rule or understand how to provide consent. I’m sure many people were very worried and confused when their medications didn’t arrive in the mail on time as expected.

So as I let out a huge sigh of relief, I have something to say to CMS: You really screwed up on this one. By not providing clear communications to Part D plans and members about this complex rule, you created a major safety issue for seniors. You didn’t think it through and consider all the logistics and implications. You dropped the ball and left it up to Part D plans and pharmacies to put it back in play, even though you didn’t provide the rules of the game.


New Government Rules Affect Medicare Part D Mail-Order Pharmacy Services

Medicare Part D

A few weeks ago I posted important news about a big change that affects Medicare beneficiaries who get their medications from a Medicare Part D mail-order pharmacy. Based on feedback I have received, many Medicare Part D plan members still do not understand how this rule affects them. That means a lot of people are probably wondering why they haven’t received their medications.

So let me try to help and explain this new rule again:

As of January 1, 2014, you must give your mail-order pharmacy permission to dispense and ship every prescription.

For example:
• If your doctor calls in a prescription, sends an e-prescription, or sends a prescription by fax to your mail-order pharmacy, you still need to give the pharmacy permission to process that order. This rule applies whether your doctor is ordering a NEW prescription or is RENEWING a prescription that has expired.

• If you normally get refills every three months, you will need to give the pharmacy permission every three months for every medication.

• If you were previously enrolled in an automatic refill service, you are no longer able to use this type of service.* Under this new rule, your prescription drugs can no longer be automatically refilled and shipped to your home.

NOTE: The pharmacy will not be able to ship your medication until you provide permission and confirm that you want to get the order.

When Do I Need to Give My Permission?

If you place your own order: If you order your own new prescriptions or refills by phone, mail, or pharmacy website, you DO NOT have to provide any additional permission. The fact that you ordered the medication yourself is considered “providing permission” under this new Medicare rule.

If your doctor places the order: If your doctor calls in a new prescription or faxes a prescription to the pharmacy, you will need to provide permission to confirm that you want this medication.

If you need refills: If you have a refill that is waiting to be shipped, you must give your consent and confirm that you want your prescription to be refilled.*

How Do I Give Permission?

Depending on your mail-order pharmacy, there are several ways to provide consent when your pharmacy receives an order from your doctor or has a refill waiting to be shipped:

Online: If your mail-order pharmacy has a website, you may be able to go online to provide consent for refills, new prescriptions, or renewed prescriptions.

Email: Your pharmacy may send you an email with a link to a website where you can provide permission.

Phone: Your pharmacy may provide a phone number to call or use an automated phone message that asks you to give your consent over the phone.

In any case, the pharmacy will need to get your consent before shipping every order, so make sure they have your most current phone number or email address. Until you give permission, your order will not be processed and your medication will not be shipped.

If you are currently using a Medicare Part D mail-order pharmacy, you should have received information by mail, phone, or email regarding this change in service. If you haven’t received any information about this new Medicare rule, you should contact your plan or your mail-order pharmacy to confirm that they have your correct contact information on file.

Why Did Medicare Establish This Rule?

Many mail-order or home delivery pharmacies provide a convenient refill service that automatically ships prescription drugs when the customer is about to run out of medication. Unfortunately, some Medicare Part D plans never checked to find out if their customers still wanted or needed their drugs. The automatic refill service was simply put on auto-pilot, so to speak, and would send the medication to the person’s home every three months or so.

Once the drug was sent in the mail, the customer was stuck with it — even if he or she was no longer taking the medication. This waste was costing Medicare a lot of money. So the Centers for Medicare & Medicaid Services (CMS) decided to take action and create this new rule.

*If you are in a Medicare Part D plan that is sponsored by your current or former employer, some rules about automatic refills may not apply to you. Contact your plan or mail-order pharmacy for additional information about refills.

Changes to Automatic Refill Services Under Medicare Part D Mail-Order Pharmacies in 2014

Part D Mail-Order Pharmacy

If you are a Medicare beneficiary who gets your medications from a Medicare Part D mail-order pharmacy, I have some important information that may affect your services starting in January 2014.

Many mail-order or home delivery pharmacies provide an automatic refill service that will automatically ship your prescription drugs when you are about to run out of medication. For example, if you have a 90-day prescription for a certain medication, the mail-order pharmacy will automatically ship a refill when you have about two weeks of medication left. This service is very convenient, especially if you take several medications, and it has always been one of the main advantages of using a mail-order pharmacy.

Unfortunately, in recent years some prescription drug plans weren’t periodically checking to find out if their customers still wanted or needed their drugs. The automatic refill service was simply put on auto-pilot, so to speak, and would send the medication to the person’s home every three months or so. Once you received that drug in the mail, you were stuck with it whether you still needed it or not.

Since pharmacies are not allowed to restock prescription drugs that are sent by mail, some automatic delivery services were creating a lot of waste and unnecessary additional costs for people with Medicare and the Part D program in general. So the Centers for Medicare & Medicaid Services (CMS) decided to take action.

Starting January 1, 2014, mail-order pharmacies (and retail pharmacies with home delivery service) must get your approval before they will ship or deliver a new prescription or refill. That means that if you normally get refills every three months, you will need to provide your consent every three months for every medication. Even if your doctor calls in a new prescription, you will still need to provide your authorization. The pharmacy will not be able to ship your medication until you confirm you want to get the order.

Depending on your mail-order pharmacy, you may have to go to a website or reply to an email to provide authorization, or the pharmacy may call you on the phone to get your consent. Either way, the pharmacy will need to reach you before shipping every order, so make sure they have your most current phone number or email address. Until someone from the pharmacy reaches you and gets your consent, the pharmacy will not be able to process the order and ship your medication.

Keep in mind that if you place an order for medication yourself — whether by phone, mail, or online — you will not have to provide additional consent when the medication is ready to be shipped. Also note that this new policy won’t affect refill reminder programs at retail pharmacies when you go in person to pick up the medication. It also won’t apply to long-term care pharmacies that give out and deliver prescription drugs.

If you are currently using a Medicare Part D mail-order pharmacy, you should be receiving a notice by mail or email regarding this change in service. The notice should provide information that is specific to your plan and your pharmacy. If you don’t receive a notice by the first week of January, you should contact the mail-order pharmacy to confirm that your correct contact information is on file.

Caution: Stay away from Medicare Part D plans that have received sanctions from CMS

MH900349511This past week, I had to create a letter regarding a Medicare Part D plan that has been sanctioned by the Centers for Medicare & Medicaid Services (CMS) for conduct that “poses a serious threat to the health and safety of Medicare beneficiaries.”

Government sanctions, or penalties, are just one more reason it is critical for you to review your Part D options every year. If you are in a plan that has received sanctions from CMS, you definitely want to look for a plan that has a high star rating (3 ½ stars or better) to make sure you are going to receive the services you pay for and deserve.

SmartD Rx, a new Part D plan from the Smart Insurance Company, is one plan that is not currently accepting enrollments due to CMS sanction action (I guess the company is not so smart). Here is just part of the letter from CMS to Smart Insurance Company regarding its SmartD Rx plan:

The Centers for Medicare & Medicaid Services (CMS) hereby informs Smart Insurance Company (Smart) of its determination to immediately impose intermediate sanctions…

These intermediate sanctions will consist of the suspension of the enrollment of Medicare beneficiaries…and the suspension of all marketing activities to Medicare beneficiaries. CMS is imposing these intermediate sanctions immediately, effective April 23, 2013…because it has determined that Smart’s conduct poses a serious threat to the health and safety of Medicare beneficiaries.

In its short tenure as a Part D sponsor, Smart has experienced widespread failures in numerous important operational areas including:

• Smart inappropriately rejected drug claims at the point of sale (i.e., pharmacy counter);

• Smart failed to properly process coverage determinations (i.e., requests for drug coverage or payment and reimbursement);

• Smart denied enrollees the chance to appeal rejected claims and failed to ensure that denied coverage determinations were reviewed by an independent third party; and

• Smart failed to process enrollment and disenrollment requests, or failed to properly process enrollment transactions.

As a result of Smart’s noncompliance, its enrollees have experienced delays or denials in receiving prescription drug coverage and increased out-of-pocket costs.

CVS Caremark’s SilverScript is another Part D plan that received sanctions from CMS in 2013. In its letter to the SilverScript Insurance Company—a subsidiary of CVS Caremark – CMS wrote:

Since January 1, 2013, SSIC has experienced widespread data system failures that have directly led to extensive violations of the Part D program’s requirements regarding enrollment processing, call center operation, and claims processing. These failures have created disruptions in tens of thousands of Medicare beneficiaries’ access to prescription medications.

 From January 1 through January 14, 2013, CMS received 2,340 complaints about SSIC’s Part D operations. CMS has received complaints about SSIC at a rate four times greater than the rate of complaints received about all other Part D sponsors combined during the same period.

Other Medicare plan sponsors that have been sanctioned by CMS in the past include HealthNet,  Arcadian, and Universal American (all 2010), and Universal Health Care Insurance Company (2013). You can go to the Part C and Part D Enforcement Actions page on the CMS website for a complete list of plans that have received sanctions and other enforcement actions or had sanctions lifted.

How to get out of a bad Medicare plan

If you are enrolled in a plan that has been sanctioned, and you have personally been affected by your plan’s poor performance, you may be able to get out and switch plans outside of the Open Enrollment period. Your chance to switch is determined by CMS on a case-by-case basis, so you’ll need to call Medicare at 1 800 MEDICARE (1 800 633-4227), 24 hours a day, 7 days a week. TTY: 1 877 486-2048. Or go to this page at for more information.

The Blind Leading the Blind: Anatomy of a Medicare Part D Monthly Premium

At least once a week one of my coworkers on our Medicare Part D team will come to me with what they think is a simple job. ‘I just need you to write a short apology letter. It should be simple,” Karen will tell me. “I have a simple project for you. All you have to do is edit this web page for Medicare Open Enrollment,” Tina will say. “We just need to ‘Medicarize’ this brochure, so it will be simple,” Chris will state.

Inevitably, I always respond, “Nothing is simple with Medicare Part D.” And then as what appeared to be an easy project becomes more complex with each new logistical problem that arises, I say, “I told you so.”

One of the most complicated “parts” of Part D – and thankfully, one that I have absolutely nothing to deal with – is what we call the annual Medicare bidding process. As our director of actuarial services notes, the process of bidding on Medicare prescription drug plans is a lot like putting together a giant puzzle. When the puzzle is completed, you end up with a monthly Part D premium of $32.07 or $41.29 or some other odd amount that seems completely random.

Unlike the commercial insurance market where providers set the premiums for a plan, Medicare Part D premiums are determined as part of a blind bidding process that begins in June of each year. Every Part D provider submits bids to the Centers for Medicare & Medicaid Services (CMS) without knowing what the competitors will offer. Then CMS sets premiums based on how the bids average out. Premiums may vary from what providers submitted depending on what their competitors bid and how they differ from expectations.

A few large competitors dominate the marketplace, so the ability to predict premiums, profitability and potential membership growth requires an educated guess as to how other Part D providers will bid. The guesswork can be quite complex and requires a detailed understanding of trends and potential growth strategies in the marketplace.

For example, is a large Part D provider going to try to maximize profits by bidding a higher number or are they looking to increase membership and so plan on submitting a lower bid to CMS? Data and historical trends are helpful, but it’s really more of an art than a science when it comes to making a good bid that has competitive premiums and features that Medicare beneficiaries want in a Part D plan.

During the next two months, CMS will thoroughly review each bid. In August, CMS will release the bid results, giving marketing departments and employees like me just barely enough time to create all the plan materials and marketing communications for Medicare Open Enrollment in mid-October.

Yes, you can switch your pharmacy at any time with Medicare Part D

Walgreens survey about Medicare Part D

This infographic from Walgreens explains some of the findings from a recent survey regarding beliefs about Medicare Part D.

Today I had an “ah ha!” moment at work.

For years I have been telling the over 2 million Medicare beneficiaries in my company’s Part D prescription drug plans that they can often save money by using a different pharmacy. Using a mail-order pharmacy almost always yields savings, as does switching to a preferred retail pharmacy that offers lower co-pays or moving to a pharmacy that simply charges less money overall for prescription medications.

And for years I have been wondering why so few Part D plan members are taking my advice and using a more cost-effective pharmacy. Why aren’t seniors taking advantage of these savings opportunities?, I have often asked my coworkers and friends.

This morning I came across the results of an April 2013 Walgreens survey that answered my question — or at least, provided one explanation.   According to the survey, almost 30% of the 1,000 beneficiaries surveyed did not know that they can switch pharmacies at any time during the year. These 300 Medicare enrollees falsely believed that they could only switch to a new pharmacy during Medicare’s annual Open Enrollment Period.  In other words, they thought that if they were using XYZ Pharmacy when they first enrolled in a plan, they’d have to stick with XYZ until Open Enrollment (October 15 to December 7 of each year).

Although many Medicare beneficiaries shun mail-order pharmacies, even though using mail order is one of the best ways to save, retail pharmacies in a preferred pharmacy network are a great alternative for some people. Using a preferred pharmacy — if the Part D plan offers a preferred pharmacy network and there is a preferred pharmacy close to home — can potentially save beneficiaries hundreds of dollars each year on prescription drug co-pays.

However, it looks as though few people are taking advantage of preferred pharmacies. In fact, only 21 percent of respondents switched to a pharmacy within their plan’s preferred network as a way to save. One-fourth (24 percent) said they were unaware of whether their plan offers a preferred pharmacy option.

The survey  “underscores the need to educate Part D beneficiaries about how they can save on prescription and other health care costs,” said Dan Luce, director of pharmacy affairs, Walgreens. Many more Medicare Part D plans are starting to offer preferred pharmacy networks, so I guess I have my work cut out for me.

On Medicare and live in the South? Make sure you’re not taking a high-risk drug.

Seniors in the Southeast are more likely to be prescribed at least one one high-risk medication.

Senior Medicare beneficiaries in the Southeast are more likely to be taking at least one high-risk drug.
Source: NPR (Dany Qato and Amal Trivedi/Alpert Medical School, Brown University)

As I mentioned in my last post, recent findings from Express Scripts show that Medicare providers in New York, New Jersey, and several southern states are less likely to prescribe lower-cost generic drugs then their counterparts in Midwestern states.

Now a new study from the Alpert Medical School at Brown University finds that more than 20 percent of Medicare beneficiaries enrolled in a Medicare Advantage plan are taking at least one high-risk medication. And beneficiaries who live in parts of the South are even more apt to be prescribed high-risk medications. In fact, in many parts of the South – especially the Southeast – more than one-third of seniors are taking drugs that, according to Medicare guidelines, are considered high risk for people age 65 and older.

For example, more than 38 percent of Medicare Advantage enrollees in Albany, Georgia, were prescribed at least one risky drug, compared to 10 percent in Mason City, Iowa, the area with the lowest rate. Beneficiaries prescribed risky drugs were also more likely to be poor, white, and female.

So why are Southerners more likely to be prescribed risky meds? According to the authors of the study, it could be that patients are asking their doctors for them. Or it could be that doctors in these regions are more apt to stick with old prescribing habits. Neither one of these reasons is a valid excuse.

Why are some drugs classifed as risky?

Certain medications are associated with a high risk of side effects and drug toxicity in the senior population, and pose a concern for patient safety. Since 2005, the Centers for Medicare and Medicaid Services (CMS) has required all Medicare Advantage plans to report prescribing rates of high-risk medications.

Many drugs are classified as risky because they stay in the body longer, increasing the risk of falls and fractures. Others are classified as drugs to be avoided in people 65 years or older because they are simply not effective enough to be used on a regular basis.

Risky drugs for seniors include amphetamines, barbiturates, muscle relaxants, and narcotics. Old-style sedating antihistamines and medications for depression and anxiety (like long-acting diazepam or Valium®) are also risky, as they can cause sleep apnea or cardiac arrest.

What drugs should be avoided?

The Centers for Medicare & Medicaid Services (CMS) has published a list of high-risk medications to be avoided in patients 65 years and older. Doctors should have this information, but patients and caregivers also need to be aware of this list. The authors of the study — a pharmacist and a medical doctor — suggest that people talk with their doctors about risky medications and make an appointment with their pharmacist to review all their medications to find out if any should be stopped or replaced with a less risky drug.

You should also check the star ratings of your Medicare plan (Part D or MA-PD) if you have prescription drug coverage. CMS awards lower star ratings to Medicare plans if a certain percentage of the plan’s members age 65 and older receive a medication that puts the patient at high risk for an adverse drug-related event, such as a fall or cardiac event. When reviewing Medicare plans, you should ask how the plan scored under “Drug pricing and patient safety.” If you live in the South and your plan has a low star rating in this category, you should definitely be on the alert for prescriptions for high-risk medications.

Live in New York or New Jersey? Better speak up and ask for that generic drug.

Location generic drugsBritish real estate developer Lord Harold Samuel once said, “There are three things you need in property. These are location, location, and location.” Apparently the same is true when it comes to prescribing generic drugs for Medicare beneficiaries, too.

According to the Express Scripts 2012 Drug Trend Report, where you hang your hat will frequently determine how often your doctor will prescribe a generic drug for you: Medicare providers in New Jersey, New York, and southern states such as Texas and Louisiana prescribe fewer cost-saving generics than their counterparts in Midwestern states such as Ohio and Wisconsin.

“A prescriber’s geographic location is a strong predictor of the proportion of generic prescriptions they write,” says Sharon Frazee, vice president, Research & Analysis, Express Scripts. “Location encompasses many features that have a complex influence on prescribing and utilization.” Some of the regional features that influence the prescribing and utilization of generic drugs include income levels, the impact of media markets and advertising dollars, and the proximity to urban centers and healthcare services.

Here are some other interesting trends that can help predict which healthcare providers are more apt to prescribe generics:

• Younger, less tenured healthcare providers, including physicians, nurse practitioners and physician assistants, are more likely to prescribe generic medications to Medicare patients than older providers with more years in practice.
• Prescribers who care for a large number of Medicare patients are more likely to prescribe generics than those with fewer Medicare patients.
• Prescribers who practice in rural areas adjacent to large cities are more likely to prescribe generics than prescribers in metropolitan areas and urban centers.

One possible explanation for these findings has to do with habit and experience: Some healthcare providers have been practicing medicine longer than many generic drugs have been on the market. They may prescribe the brand drugs with which they are familiar and that have worked well for their patients out of habit, without giving any thought to the cost. If their patients don’t speak up and ask about generic drugs, they’ll immediately fill out the script for the brand-name drugs they know the best (this is especially true if the physician has pre-printed scripts for certain popular brands).

As I have mentioned in previous posts, brand-name drugs, especially “blockbuster drugs” like Lipitor® and Plavix®, are often a lot more expensive than their generic counterparts. And if pricing trends from 2011 to 2012 are any indication, I wouldn’t expect prices on brand-name drugs to come down anytime soon.

The increasing availability of lower-cost generic drugs offers significant savings opportunities for Medicare beneficiaries – but unless you speak up and specifically ask your healthcare provider to prescribe generics whenever possible, you may never enjoy these added savings. Especially if you live in New York or New Jersey.

Read the Fine Print Before Getting Locked Into a Restricted Network Part D Plan

Don't get locked into a Part D plan with a restricted pharmacy network unless it's right for you.

Don’t get locked into a Part D plan with a restricted pharmacy network unless it’s right for you.

As I’ve mentioned several times before, Medicare beneficiaries should always read the fine print and watch out for the terms “preferred network” or “restricted network” when choosing a Part D prescription drug plan (PDP).

Restricted network pharmacy plans encourage members to use national pharmacy chains (such as CVS or Walgreens), which are called preferred network pharmacies. These preferred pharmacies offer covered drugs to plan members at lower out-of-pocket costs than what the member would pay at a non-preferred network pharmacy. A non-preferred network pharmacy, on the other hand, is often the small community pharmacy in your town.

Many of the largest Part D plans have restricted networks, including Humana Walmart-Preferred Rx Plan, Aetna CVS/pharmacy PDP, First Health Value Plus PDP, Rite Aid EnvisionRx Plus, AARP Medicare Rx Preferred, and CVS Caremark Plus. Beneficiaries are attracted to these plans because of the low premiums and copays.

In its 2014 Call Letter, the Centers for Medicare & Medicaid Services (CMS) remind plan sponsors that beneficiary communications regarding preferred networks must be “clear and unambiguous.” In addition, CMS reminds Part D plans that the plans can never–under no circumstances–require beneficiaries who get Extra Help from Medicare and qualify for low-income status (LIS) to use a preferred network pharmacy in order to get their LIS copays.

According to groups like the National Community Pharmacists Association and the Indo-American Pharmaceutical Society, many Medicare beneficiaries are confused by Part D marketing activities that led them to sign up for a “preferred network” plan, only to later find out that the closest pharmacy in the preferred network is 20 miles from their home.

This week, the IAPS posted a sample letter to CMS on its website, and asked that every independent pharmacy owner cut and paste the letter and send it to CMS. Here is a portion of that letter:

I am writing in response to the release by CMS of the Medicare Part D draft Call Letter for 2014. I applaud CMS for addressing certain issues in the Call Letter that have concerned independent community pharmacies and our patients for many years. As an independent community pharmacist, I wish to voice my support for the following provisions that focus on eliminating abusive practices by Part D pharmacy benefit managers (PBM’s) that have disadvantaged patients and independent community pharmacies. I respectfully ask that CMS include these provisions in the agency’s final Call Letter for 2014:

Preferred Pharmacy Networks: We support the fact that CMS addresses some of the improprieties regarding so-called preferred Part D pharmacy networks. My pharmacy is not offered the chance to participate in the vast majority of these networks, which negatively impacts many of my patients who are forced to pay higher co-pays to continue to fill prescriptions at their pharmacy of choice. Plans should be required to offer any pharmacy willing to accept a plan’s terms and conditions the chance to participate in the preferred network per statute (42 U.S.C. § 1395w-104(b)(1)(A)).

In addition, CMS hits the nail on the head when it says that some of these networks require pharmacy “pay to play” in these networks. Where do these reverse pharmacy payments to the plans go? To the beneficiary? To Medicare? Or to the bottom line of the plans? Why should I have to pay a plan to serve my patients?

In addition, many of my patients are confused by these preferred pharmacy networks’ marketing activities. Because of the marketing, patients may believe that they can use any pharmacy in a “preferred” plan and get lower prescription co-pays. Patients may only learn that this is not the case when they come to my pharmacy, and then have to drive long distances to a remote preferred pharmacy in the network to get the lower co-pays.

Finally, there is evidence from the Part D plan finder tool that these preferred networks are charging beneficiaries higher prices (or the same price) for medications than they can obtain at non-preferred pharmacies like mine. It is not clear to me why a pharmacy would be designated as preferred if they are not lowering prescription prices for beneficiaries. In fact, if a my pharmacy is being paid less for the medications than a preferred pharmacy, and the beneficiary is paying more in co-pays at my pharmacy, how can it be that Medicare is actually saving money?

Switching from Lipitor to a generic should be a no-brainer for Medicare members…or so I thought!

Brand drugs like Lipitor cost much more than genericsOn November 30, 2011, the first generic version of Lipitor® (atorvastatin) hit the market. A few months prior, my company asked me to write a letter to all the members in our Medicare Part D plans who were taking Pfizer’s top-selling cholesterol medicine. In the letter, I advised our members that less expensive generic versions of the drug would be soon be available. I also reminded them that not only do these generic drugs cost less than Lipitor, but copayments are also generally lower for generics than for brand-name drugs.

This is a no-brainer, I thought to myself. Everyone is going to take advantage of this savings opportunity, provided their doctors say it’s okay to switch to the generic.

I was wrong.

I just found out that less than 3 percent of the members who received this letter switched to a generic version of Lipitor. I find this very surprising.

Brand-name drugs, especially “blockbuster drugs” like Lipitor and Plavix®, are often a lot more expensive than generic drugs. And if pricing trends from 2011 to 2012 are any indication, I wouldn’t expect prices on brand-name drugs to come down anytime soon.

According to an Express Scripts report based on 2012 drug claims data, prices for brands increased 13.3 percent while generic drug prices decreased by 21.9 percent. The report states that the price differences between brand-name and generic drugs is more than 35 percent, which is “the largest widening of brand and generic prices since Express Scripts began calculating its Prescription Price Index in 2008.”

Granted, Pfizer did make a lot of efforts to hold onto its customers–for example, they offered insured patients a discount card to get Lipitor for $4 a month–but I know Pfizer didn’t reach everyone, because about 97 percent of our members are still getting Lipitor through their Medicare Part D plan. So about 97 percent of our members are not only paying more than they need to, but they are also approaching the Coverage Gap stage of their benefit a lot faster than those beneficiaries who switched to the generic drug.

Let’s compare Mr. Smith’s costs for Lipitor with Mrs. Johnson’s costs for the generic version of Lipitor as an example:

Mr. Smith always uses brand-name drugs
• During the Initial Coverage period, Mr. Smith has a 25 percent co-payment on brand-name drugs. He pays $32.25 for a 30-day supply of Lipitor. His plan pays the remainder, or $96.75.
• Mr. Smith always uses brand-name drugs, so he reaches the Coverage Gap in July. (Remember, it’s the total amount that both you and your plan pays that advances you to the Coverage Gap.)
• Now he has to fork over $61.25 for Lipitor (the full cost of the drug minus the
47.5 percent discount) for the rest of the year.
Mr. Smith’s total annual cost for Lipitor is $561.

Mrs. Johnson always uses generic drugs
•During the Initial Coverage period, Mrs. Johnson has a 25 percent co-payment on generic drugs. She pays $3.27 for a 30-day supply of atorvastatin, which is a generic version of Lipitor. Her plan pays the remainder, or $9.81.
• Mrs. Johnson always uses generic drugs whenever possible, so she never reaches the Coverage Gap.
Mrs. Johnson’s total annual cost for atorvastatin is $39.24.

I know I’d much rather pay $3.27 for a generic that’s just as safe and effective as a brand-name drug that costs 10 times more!

So is there anyone out there who can tell me why a large majority of Medicare beneficiaries are paying so much more than they have to for their medications? What am I missing? Surely not my brain!?

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