Medicare Drug Beneficiaries with Diabetes Use 2 to 3 Times More Brand-Name Drugs than VA Patients, at Substantial Cost
Medicare Part D provides drug coverage to nearly 30 million beneficiaries and contracts with more than 1,000 private plans to administer drug benefits, each using a distinct formulary and cost-sharing arrangement. VA drug benefits are managed by a central pharmacy benefits manager (PBM) with a single formulary, which has substantially lowered pharmacy spending while maintaining high quality care. This study compared the use of brand-name medications among patients using Medicare or VA drug benefits, and estimated how spending would change if the use of brand-name drugs in one system mirrored the other. Using Medicare and VA data from 2008, investigators identified a national sample of 1,061,095 Part D beneficiaries and 510,485 Veterans age 65 and older with diabetes. Investigators focused on prescription use for four medication groups commonly used for diabetes: 1) oral hypoglycemics, 2) long-acting insulins (analogues), 3) statins, and 4) ACE inhibitors/ARBs.
- Medicare beneficiaries with diabetes are more than twice as likely to use brand-name drugs than a comparable group within VA: 35% vs. 13% for oral hypoglycemics, 51% vs. 18% for statins, 43% vs. 21% for ACEs/ARBs, and 75% vs. 27% for insulin analogues.
- If brand use in Medicare matched that in VA for these four medication groups, investigators estimated more than $1 billion in avoidable spending by Medicare on brand-name drugs in 2008 alone. Conversely, spending in VA would have increased by 57% for these drugs if Veterans used brand-name drugs at the same rate as in Medicare.
- Substantial regional variation exists in brand-name use in both Medicare and VA. For each drug group, however, the highest-using VA regions still had lower rates of brand use than the lowest using Medicare regions.
- There may be unmeasured differences in the patient populations that were compared, although it is unlikely they would explain the substantial differences in brand use found.
- Investigators could not estimate the effect of discount pharmacies offering $4 generics; in both VA and Medicare, some patients could purchase $4 generics without generating an insurance claim.
- Potential savings could be over-estimated because some brand-name drugs have lost patent protection since 2008; however, similar patterns of brand use likely exist among other drug groups.
- Medicare Part D could substantially reduce program costs by lowering brand-name drug use to match VA (where quality of care is equal to, or better, than in Medicare). Conversely, program costs would increase dramatically in VA if brand-name use were more similar to Medicare.
Dr. Gellad was supported by an HSR&D Career Development Award; he and Drs. Zhao, Mor, Thorpe, Good, and Fine are part of HSR&D's Center for Health Equity Research and Promotion, Pittsburgh, PA.
Gellad WF, Donohue JM, Zhao X, et al. Brand-Name Prescription Drug Use among Diabetes Patients in the VA and Medicare Part D: A National Comparison. Annals of Internal Medicine June 11, 2013;e-pub ahead of print.