Medicare may not be getting the best prescription drug deals it can, meaning senior citizens using the plan are overpaying, a new study suggests.

Private insurance companies adopt cheaper generic drugs at a faster pace than government-run Medicare, a study by lobbying group Access for Affordable Medicines concludes. Generics are intended to be a lower-cost alternative to brand name pharmaceuticals. 

Commercial health plans put generics on the lower-cost generic tier at least 90% of the time, according to data supplied by the AAM to Karma. Medicare drug plans usually put generics on a tier with more expensive brand names.

About 15% of Americans, or 44 million, are covered under Medicare and that number may rise to 79 million by 2030. That suggests vast amounts of money going to big pharma companies, who compete with generic firms producing FDA approved copies of the patented medications. AAM said in an earlier study that about $12 billion was spent on brand name, or non-generic drugs, where the Medicare coverage was less than 25%.

The reason for the slow uptake may be a result of recent Medicare rule changes, according to Bloomberg News. Those rules put generics and branded drugs in competition, and the branded medicines often provide fat rebates to pharmacy-benefit managers.

The Trump Administration has made providing low-cost drugs a cornerstone of its Medicare policy. The administration announced last month a plan to link the costs of drugs provided under Medicare to what other industrialized countries pay.

“Generics face significant challenges to market sustainability – not least as a direct result of Medicare Part D formulary obstacles that undermine patient adoption,” the AAM said in the previous study’s conclusion. 

  • “Policymakers should act to ensure that America’s patients, as well as the overall health care system, continue to attain the full value of lower-priced generic competition,” the statement continued.
  • While FDA generic drug approvals soared last year, many of the cheaper medications aren’t yet available for sale, The Wall Street Journal reported this week.