Effect of Generic-only Drug Benefits on Seniors' Medication Use and Financial Burden

Published Online: September 01, 2006
Chien-Wen Tseng, MD, MPH; Robert H. Brook, MD, ScD; Emmett Keeler, PhD; W. Neil Steers, PhD; Beth E. Waitzfelder, PhD; and Carol M. Mangione, MD, MSPH

Background: Generic-only drug benefits are a way to provide some coverage, as opposed to no coverage.

Objective: To examine how switching from brand name to generic-only drug coverage affected seniors' medication use and financial burden.

Study Design: Data are from a 2002 cross-sectional survey conducted for a separate study on benefit caps. Participants belonged to a Medicare managed care plan in one state and had $2000 capped brand name benefits in 2001 but generic-only benefits in 2002.

Methods: Participants reported their cost-cutting strategies before and after the change to generic-only coverage, the medications affected, and their financial burden. We conducted bivariate and multivariate analyses of cost-cutting strategies and financial burden before and after implementation of generic-only benefits.

Results: Among 611 participants (63% response), rates of switching medications increased after discontinuation of brand name coverage (27% vs 8%, P < .001). Switches were from brand name drugs to generic equivalents (14%) (eg, Prozac to fluoxetine hydrochloride), to nonequivalent generics (26%) (eg, Paxil to fluoxetine), and to different brand name drugs (45%) (eg, Paxil to Zoloft). Ninety percent of brand name switches remained in the same therapeutic class (eg, selective serotonin reuptake inhibitors). After discontinuation of brand name coverage, participants reported higher rates of decreased medication use (28% vs 17%) and greater difficulty paying for prescriptions (65% vs 37%) (P < .001 for both).

Conclusions: Changing from brand name benefits to generic-only drug coverage led many participants to switch to less expensive medications but also decreased medication use and increased financial burden. Insurers need to actively help patients adjust to a discontinuation of brand name coverage.

(Am J Manag Care. 2006;12:525-532)

Policy makers and insurers increasingly view generic-only drug benefits as a way to provide at least some drug coverage, as opposed to no coverage, and to emphasize generic drugs as effective cost-saving medication choices for patients.1-7 Before implementation of the Medicare Part D drug benefit plan, generic-only coverage comprised 60% of Medicare managed care drug coverage in 2003, compared with 18% in 2001.1 Some Medicare drug benefit plans are using limited generic-only coverage to bridge the $2250 to $5100 "doughnut hole" in total annual drug expenditures (ie, the gap between partial coverage up to a limit and catastrophic coverage), during which patients typically would be 100% responsible for their drug costs.8,9 With generic-only coverage, patients must pay for all brand name drugs out of pocket even if no generic drugs are available within the treatment class. Because 38% of Medicare beneficiaries are expected to have high enough drug expenditures to fall into the Medicare drug benefit coverage gap,10 it is important to understand how switching from brand name/generic to generic-only benefits can affect seniors.

A study by Christian-Herman et al5 used pharmacy claims to show that an involuntary switch from brand name to generic-only coverage led to increased out-of-pocket drug costs for patients and to decreased use of important medications (eg, angiotensin-converting enzyme inhibitors for heart failure). Our study adds to that evidence using data from patient surveys (1) to adjust for patient characteristics (eg, income and health status) and to describe which seniors may be most affected by brand name coverage discontinuation, (2) to ask about financial burden, (3) to describe whether seniors adopted other cost-cutting strategies besides decreasing medication use (eg, switching drugs and using samples), and (4) to evaluate how discontinuation of brand name coverage affected medication use for a broader range of treatment classes (eg, nonsedating antihistamines and antihypertensives).

Our data are from seniors who were surveyed in 2002 for a separate study11 on the effect of benefit caps on medication use. These participants had $2000 capped brand name drug benefits in 2001 but were involuntarily switched by their plan to unlimited generic-only benefits in 2002. We took advantage of this natural experiment to ask seniors about their cost-cutting strategies in 2001 and 2002 (ie, before and after the switch from brand name benefits to generic-only benefits), the medications affected, and their reported financial burden from drug costs.


Design, Setting, and Participants

Participants belonged to a Medicare managed care plan in one state with 438 802 members and purchased at least 1 prescription during 2001. At the time of the single cross-sectional survey (March through July 2002), participants had recently been involuntarily switched by their plan from capped brand name benefits in 2001 to unlimited generic-only coverage in 2002. Although the survey was designed to study the effect of benefit caps, we added questions to ask participants about their cost-cutting strategies in 2001 (during brand name/generic coverage) and in 2002 (after the change to generic-only benefits). Our participants were not sampled from among all plan members but were restricted to a subset of seniors based on inclusion criteria for the study on benefit caps. Therefore, participants were sampled from among plan members (1) who had $2000 capped brand name benefits in 2001 but who did not exceed their cap (ie, the plan's share of cost was less than $2000) and (2) had 2001 total drug expenditures ranging from $1277 to $5042 (mean, $2483). These criteria were set so that participants could act as a control group for seniors who had exceeded their caps in 2001 ($750 or $1200 caps for 75-120 days) by being similar in distribution of total drug expenditures. In our resulting sample, two thirds of the participants had high enough total drug expenditures in 2001 to reach the $2250 to $5100 coverage gap in the 2006 Medicare Part D prescription drug benefit. Our participants' drug expenditures also placed them in the highest quartile (77th-99th percentiles) of plan members with $2000 caps in 2001, although this was not part of the sampling criteria.

Data were collected from a single cross-sectional survey conducted from March through July 2002 (3-7 months after the change from brand name/generic drug benefits in 2001 to generic-only drug benefits in 2002). We mailed potential participants information on the study, contacted nonrefusers by telephone (=3 attempts), and mailed questionnaires to those who refused telephone surveys or who could not be contacted by telephone (=3 mailings). Participants were eligible if they were aged 65 years or older, not covered by Medicaid, continuously enrolled in 2001, and were plan members at the time of the 2002 survey. Participants who were cognitively impaired or were unable to complete the survey in English were ineligible for the study.

Drug Benefits

All participants had the same formulary with $7 to $8 generic and $25 brand name copayments in 2001 and with $9 generic copayments in 2002. The plan informed members in advance of the change to generic-only benefits. Brand name drugs remained available at discounted prices by mail order. All of the plan's Medicare managed care enrollees in the state were changed to generic-only coverage, so no comparison group was available in 2002.

Outcomes Variables and Statistical Analysis

We calculated each participant's 2001 total drug expenditures from pharmacy claims by summing costs paid by the patient and by the plan. We examined the availability of generic equivalents for brand name drugs in 2001 from a field in the claims indicating whether drugs were generics (eg, fluoxetine hydrochloride), brand name drugs with generic equivalents (eg, Prozac and fluoxetine), or brand name drugs without generic equivalents (eg, Zoloft). We divided the number of brand name drugs with generic equivalents by the total number of unique drugs to calculate each participant's percentage of brand name drugs with generic equivalents. For the top 10 medications affected by decreased use, we examined whether generics were available within the same treatment class in 2001.

In the survey, we asked participants if they had adopted any of 7 cost-cutting strategies during the following 2 periods: (1) in 2001, during brand name/generic coverage, and (2) in 2002 (up to the time of the survey), after the change to generic-only coverage. The 7 possible strategies were as follows: (1) switched to less expensive medications, (2) used current medications less often than wanted or prescribed, (3) stopped medications altogether, (4) did not start newly prescribed medications, (5) used free samples, (6) used others' medications, or (7) bought medications from outside of the United States. Participants were asked whether they adopted strategies only in 2001, only in 2002, or in both 2001 and 2002. We asked all participants to answer yes only if cost was the primary reason for adopting the strategy. We defined participants as having decreased medication use if they used less medications, stopped medications, or did not start medications.

Participants reported their age, education, race/ethnicity, marital status, household size, annual household income, self-rating of health, functional independence in intermediate activities of daily living, and presence of any of 10 common medical conditions (hypertension, diabetes mellitus, heart disease, depression, stroke, cancer, peptic ulcer disease, hypercholesterolemia, osteoporosis, and bronchitis/asthma). We used the median income and household size of participants who reported their actual income (43% of the sample) to impute the incomes of participants who gave only their income ranges (42% of the sample) or who withheld their income information (15% of the sample).

To test the effect of the change from brand name/generic to generic-only coverage on adoption of cost-cutting strategies and financial burden, we conducted bivariate McNemar tests of correlated proportions to determine if participants reported higher rates of cost-cutting strategies and greater difficulty paying for medications in 2002 than in 2001. To determine which participants were most at risk for decreasing medication use after losing brand name coverage, we conducted multivariate logistic regression analyses. We included participant-level random effects (xtlogit in STATA12) to account for repeated measures, because time points were nested within participants (ie, patients reported cost-cutting strategies for 2 periods [2001 and 2002]). Our dependent variable was decreased medication use (ie, used less, stopped, or did not start) in 2001 vs 2002. We included a variable representing brand name/generic vs generic-only benefit (ie, benefit type) as a covariate so that we could test the effect of independent variables on cost-cutting strategies after accounting for drug benefit type. Our independent variables included patients' sex, age, race/ethnicity, education, marital status, annual household income, supplemental drug insurance coverage, self-rating of health, and functional independence in intermediate activities of daily living, as well as whether they completed a telephone or mail survey, the month they were surveyed in 2002, and the number of health conditions reported at the time of the survey. The significance level was set at 2-sided P < .05.

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