Brand-Name Drug Use by Medicare Beneficiaries Inflates Costs

If diabetes patients covered by Medicare Part D used generic medications at the same rate as those covered by the VA, the program would save more than $1 billion per year.

Medicare beneficiaries with diabetes are more than twice as likely to use brand-name drugs as diabetes patients whose health care is covered by the United States Department of Veterans Affairs (VA), according to the results of a study published online on July 16, 2013, in Annals of Internal Medicine. If Medicare patients had used generic drugs with the same frequency as VA patients, the program could have saved an estimated $1.4 billion in a single year.

The retrospective cohort study included more than 1 million Medicare Part D beneficiaries and 510,485 veterans aged 65 and older, all with diabetes, and compared the overall and regional differences in brand-name drug use among the 2 populations in 2008. The researchers collected data on the number of patients filling brand-name or generic prescriptions for medication groups commonly used in diabetes patients, including oral hypoglycemics, long-acting insulin, statins, and angiotensin-converting enzyme (ACE) inhibitors or angiotensin-receptor blockers (ARBs). Differences in drug spending were then estimated by calculating what spending by Medicare and the VA would have been if each were to adopt the other’s rate of brand and generic use.

The results indicated that overall, Medicare beneficiaries were 2 to 3 times more likely to use brand-name drugs than were VA patients. Of Medicare patients taking oral hypoglycemics, 35.3% used brand-name drugs, compared with just 12.7% of veterans. Of Medicare beneficiaries on statins, 50.7% received brand-name medications, compared with just 18.2% of comparable VA patients. Among patients receiving ACE inhibitors or ARBs, 42.5% of Medicare and 20.8% of VA patients used brand-name drugs. For patients treated with insulin, 75.1% covered by Medicare used brand-name products, compared with just 27% of veterans. Differences in brand versus generic drug use among Medicare and VA patients fluctuated somewhat depending on location.

Overall, the researchers estimated that Medicare spending in 2008 could have been reduced by $1.4 billion if brand-name diabetes drugs were used by beneficiaries at the same rate as by VA patients. The program could have saved $589 million specifically for oral hypoglycemics, $189 million for insulin, $404 million for statins, and $183 million for ACE inhibitors or ARBs. If VA diabetes patients had adopted the brand-name drug habits of Medicare beneficiaries, however, the agency’s diabetes drug spending in 2008 would have increased 57%, to $108 million.

The researchers could not identify or explain the factors causing the difference in brand-name drug use among the 2 groups, but they point out that their findings present opportunities to cut drug spending without sacrificing the quality of care.

“Although a change in legislation to make Part D function like the VA may be neither politically feasible nor warranted, policy levers for increasing appropriate use of generic medications in Part D are available,” the researchers write. “These potential savings could be realized through policies that promote Part D plan efficiency and by encouraging physicians to consider costs and value in their prescribing.”