The Brand Name Game

A prescription medication study found that using only generic drugs would have saved Medicare $1.67 billion dollars and patients $270 million in 2017.

chart of branded meds

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Big pharma plays “the name game”. Pharmaceutical companies brand their medications so there is name recognition among patients and providers when the time comes for a new prescription. Despite minor molecular differences, generic drugs are essentially the same as their brand name counterparts. However, brand name drugs usually cost considerably more than their generic equivalent.

Medicare foots approximately one-third of total prescription drug spending in the US. Socal et al. at the Johns Hopkins School of Public Health examined how much patients were spending on generic compared to brand name drugs covered by Medicare Part D. In 2017, they analyzed a 20% sample of Medicare beneficiaries which included 169 million claims for 224 multi-sourced drugs – that is, drugs that have both a brand name and generic version.

The figure compares actual spending on branded drugs to a projected cost had a generic brand been used instead. The researchers divided their analysis into two categories: Medicare program spending (program) and patient out-of-pocket spending (OOP). DAW in the figure stands for Dispense As Written, where a clinician’s prescription precludes substitution of generic for branded medication.

Actual branded drug spending exceeded projected generic brand costs across all measures. Although branded medications only account for 5% of multi-source drug claims, they drive $3 billion dollars in Medicare spending each year, and cost patients nearly $500 million dollars out of pocket. Notably, the study found that using only generic drugs would have saved Medicare $1.67 billion dollars and patients $270 million in 2017.

Approximately 46% of patients requested brand name drugs over the generic version at least once in the past year, often driven by advertisement from pharmaceutical companies. The researchers urge policies to promote generic brands among providers to help patients save money when possible. Awareness by providers and patients of the cost differential and potential savings is the first step.

Socal MP, Bai G, Anderson GF. Factors Associated With Prescriptions for Branded Medications in the Medicare Part D Program. JAMA Network Open. 2021;4(3):e210483.