Yesterday, our pharmacies received an update from a major Part D plan in our area. This update stated:
Effective immediately, [plan] will continue to cover brand name ABILIFY at the non-Preferred Brand Tier. The generic, aripiprazole, will NOT be covered for the [plan] members. Please continue to dispense ABILIFY rather than substituting the generic product…
Given that the generic product is already close to half the price of the brand Abilify and falling (generic 5 mg aripiprazole down by roughly $100 in the last 3 weeks), one has to question the reasoning for this policy. Manufacturer rebates that lower the cost of the brand name drug to offset the difference in price compared to the generic may be the reason such a policy exists. Our state Medicaid program leverages rebates in a similar way.
Another observation made was that plan members’ co-pays are going to remain high for what is now a generically available drug. This policy is an example of cost shifting in Medicare Part D plans. The patient will be paying a non-preferred brand name drug co-pay (for this plan, 33% of the adjudicated amount, which equates to roughly $310 per month) instead of a generic co-pay ($7 per month), a significant difference.
It is important to note that, unlike a Medicaid program, where the use of rebates lowers the cost of medications for the payor AND patient co-pays are generally very low ($1-3), rebates in the non-transparent world of Medicare Part D are not applied to the adjudicated amount. This means that a prescription for Abilify 5 mg will adjudicate for roughly $950 per 30 days, and the patient will be responsible for 33% of this amount. The generic (assuming a generous, non-MAC reimbursement of Average Wholesale Price (AWP)- 25% )** would result in a total adjudicated amount of about $725. Ignoring any rebates, the cost of the brand name Abilify to the PBM would be lower (about $640) than the generic product (about $712). All of the difference (not counting any rebates) is due to a shift in co-pay to the patient.
The other, possibly less noble reason, however, is that the PBM may profit from a better “spread” for brand name drugs (see an unscientific analysis of CMS data in “Examining Medicare Part D Transparency“). Between the cost shifting of the medication to the patient and the markup that the PBM takes above the reimbursement made to the pharmacy, this type of policy may represent a significant windfall to the PBM at the expense of both the patient and Medicare. The lack of transparency in Medicare Part D (and other PBM run commercial plans) is costing everyone.
** In reality, this generic medication would likely be subject to a MAC (Maximum Allowable Cost) price, and reimbursement to the pharmacy would be closer to $500-$550 per 30 day supply. This turns the equation upside down without rebates from the manufacturer of the brand name drug. The cost shifting, however, remains and the patient is still paying a large percentage of the cost for the brand name drug. If rebates were handled equitably, the patient copay would reflect a generic copay instead of a non-prefered brand name tier.
