Article

Journal of General Internal Medicine

, Volume 29, Issue 1, pp 230-236

Potential Savings Associated with Drug Substitution in Medicare Part D: The Translating Research into Action for Diabetes (TRIAD) Study

  • O. Kenrik DuruAffiliated withDavid Geffen School of Medicine, University of California Email author 
  • , Susan L. EttnerAffiliated withDavid Geffen School of Medicine, University of CaliforniaDepartment of Health Policy and Management, UCLA Fielding School of Public Health, University of California, Los Angeles
  • , Norman TurkAffiliated withDavid Geffen School of Medicine, University of California
  • , Carol M. MangioneAffiliated withDavid Geffen School of Medicine, University of CaliforniaDepartment of Health Policy and Management, UCLA Fielding School of Public Health, University of California, Los Angeles
  • , Arleen F. BrownAffiliated withDavid Geffen School of Medicine, University of California
  • , Jeffery FuAffiliated withDavid Geffen School of Medicine, University of California
  • , Leslie SimienAffiliated withDavid Geffen School of Medicine, University of California
  • , Chien-Wen TsengAffiliated withJohn A. Burns School of Medicine, University of HawaiiPacific Health Research and Education Institute

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ABSTRACT

BACKGROUND

Drug substitution is a promising approach to reducing medication costs.

OBJECTIVE

To calculate the potential savings in a Medicare Part D plan from generic or therapeutic substitution for commonly prescribed drugs.

DESIGN

Cross-sectional, simulation analysis.

PARTICIPANTS

Low-income subsidy (LIS) beneficiaries (n = 145,056) and non low-income subsidy (non-LIS) beneficiaries (n = 1,040,030) enrolled in a large, national Part D health insurer in 2007 and eligible for a possible substitution.

MEASUREMENTS

Using administrative data from 2007, we identified claims filled for brand-name drugs for which a direct generic substitute was available. We also identified the 50 highest cost drugs separately for LIS and non-LIS beneficiaries, and reached consensus on which drugs had possible therapeutic substitutes (27 for LIS, 30 for non-LIS). For each possible substitution, we used average daily costs of the original and substitute drugs to calculate the potential out-of-pocket savings, health plan savings, and when applicable, savings for the government/LIS subsidy.

RESULTS

Overall, 39 % of LIS beneficiaries and 51 % of non-LIS beneficiaries were eligible for a generic and/or therapeutic substitution. Generic substitutions resulted in an average annual savings of $160 in the case of LIS beneficiaries and $127 in the case of non-LIS beneficiaries. Therapeutic substitutions resulted in an average annual savings of $452 in the case of LIS beneficiaries and $389 in the case of non-LIS beneficiaries.

CONCLUSIONS

Our findings indicate that drug substitution, particularly therapeutic substitution, could result in significant cost savings. There is a need for additional studies evaluating the acceptability of therapeutic substitution interventions within Medicare Part D.

KEY WORDS

pharmacoeconomics Medicare health care policy