Generics of Older Drugs Could Have Saved Medicare Billions, Study Says

Medicare and its beneficiaries could have saved an estimated $17.7 billion over a seven-year period on generic versions of older medicines instead of paying for newer, chemically similar but more expensive brand-name drugs, according to a study published in the Annals of Internal Medicine last month. The study was conducted as part of the Collaboration for Research Integrity and Transparency at Yale Law School, funded by the Laura and John Arnold Foundation. The intent was to estimate the potential savings associated with using racemic precursors instead of their single-enantiomer versions to the Medicare Part D drug benefit program and its beneficiaries. Between 2011 and 2017, Medicare and beneficiaries could have saved the $17.7 billion through substitution of 12 single-enantiomer drugs with their racemic precursors. Substitution of armodafinil for modafinil would have actually increased Medicare spending, but substitution of esomeprazole for omeprazole accounted for more than three quarters of the total estimated savings, and approval of generic esomeprazole in January 2015 contributed to an approximate 20% decline in total savings from 2015 to 2017 when compared with 2012 to 2014.