Medicare and Generic Prescription Drugs
As a Medicare beneficiary, it’s important for you to understand the difference between brand-name and generic drugs, and to know about your coverage options under Medicare Part D (prescription drug coverage).
Medicare Part D provides optional prescription drug coverage for Medicare beneficiaries. Available from private, Medicare-approved insurance companies, Medicare Prescription Drug Plans usually cover some commonly prescribed generic prescription drugs.
What are generic prescription drugs?
A generic drug is a “bioequivalent” version of a brand-name drug, according to the Food and Drug Administration (FDA). In most cases, generic drugs are less expensive than brand-name drugs. According to the FDA, today nearly 8 in 10 prescriptions are filled with generic drugs.
When a company comes out with a new drug, there is a period of time when only that company can sell the drug. The company creates a name for the drug; this is its “brand name.” After this period is over, the FDA can approve a generic equivalent if a drug company develops one.
Manufacturers of generic drugs don’t have to repeat all of the costly clinical trials done by the manufacturer of the brand-name drug. Instead, to gain approval from the FDA, they must prove that the generic version contains the same active ingredient as the brand-name version (inactive ingredients may vary) and provides very similar concentrations of the drug in the blood.
A generic drug must also:
- Be identical to the brand-name drug in strength, dosage form, and how you take the drug.
- Be prescribed for the same conditions and in the same way as brand-name drugs for those conditions
- Meet the same requirements for identity, strength, purity, and quality as the brand-name drug
- Be manufactured under the same standards of the FDA’s good manufacturing practice regulations required for brand-name products
Medicare Prescription Drug Plans
Medicare Prescription Drug Plans are available from private, Medicare-approved insurance companies. This optional insurance may help with your prescription drug costs.
There are two ways to get Medicare prescription drug coverage:
- A stand-alone Medicare Part D Prescription Drug Plan, which works alongside your Original Medicare coverage.
- A Medicare Advantage Prescription Drug plan, which includes all the same benefits as Medicare Part A and Part B (except for hospice care, which is still covered under Medicare Part A), prescription drug coverage, and may include other benefits, such as routine vision care.
Each Medicare Prescription Drug Plan has a list of prescription drugs it covers, called a formulary. Formularies are typically divided into tiers, with the lowest tier including less expensive drugs (such as many generic drugs) and the highest tier including the most expensive drugs. Keep in mind that formularies may change at any time. Your Medicare plan will notify you if necessary.
If a prescription drug is available in both generic and brand-name forms, you can usually save money if your doctor prescribes the generic version for you. In some cases, a doctor may indicate that the brand-name drug is medically necessary for you and that a generic drug cannot be substituted. You or your doctor might be able to file an exception with your plan to get a lower copayment.
Before taking any prescription drug, or switching from a brand-name drug to a generic drug, you should consult with your medical provider.