Medicare Donut Hole: Are Generics Really Always the Cheapest Drugs?

Okay, we’re usually one of the first to suggest that folks looking for more affordable prescription drugs check out any generics that may be available, but before you go off and switch out all your brand name drugs for generics, take a minute to step back and do some quick calculations.  Believe it or not, if you’re on a Medicare Part D prescription drug plan, there may be some cases where the brand name prescription drug is cheaper than the generic version. In some cases, a lot cheaper.

Wait! I thought Generics Were Always Cheaper Than the Brand Name Drugs!

Well, usually generics are cheaper than the brand name drugs, but Medicare Part D and the Affordable Care Act throw a little bit of a monkey wrench into that old truism.

One of the main objectives of the Affordable Care Act has been to close the Medicare Part D “donut hole,” the coverage gap which limits how much Medicare Part D will cover for prescription drugs. Currently, the Medicare Part D coverage gap starts when you hit $2,930 in prescription drug costs. Medicare Part D coverage picks up again once you hit $6,657 in drug costs.

In between those two points, you’re in the “donut hole.” The Affordable Care Act is gradually closing the coverage gap over the next few years, but in the meantime, Medicare Part D olan members will receive a 50% discount on their brand name drugs while they are in the “donut hole.” Generic prescription drugs are discounted in the Medicare Part D “donut hole” as well. In 2012, generic drugs are discounted 14% in the “donut hole.”

That difference in the discount between brand name and generic drugs is why some brand name drugs can end up being cheaper than their generic counterparts. For example, if you take Cozaar could run you as much as $300 retail for a 90 day supply. The generic version of Cozaar retails for substantially less, generally only about $220 for the $90 day supply. But once you count in Medicare Part D donut hole discounts, the generic version costs about $190, but the brand name Cozaar only costs about $150. It’s a savings about $40. Not bad.

So if you’re on Medicare Part D, sit down for a second and think about whether generics really are your cheapest option. For once, the brand name drugs might actually be your best bet!

Will you hit the Medicare Part D donut hole this year? Tell us about it!

Related posts:

1. Are You in the Medicare Part D “Donut Hole” Yet?
2. How Far Are You Into the Medicare Part D Prescription Drug “Donut Hole”?
3. Halfway Through the Year! How Far Are You Into the Medicare Part D “Donut Hole”?
4. Open Enrollment: the Medicare Part D “Donut Hole” Review
5. The Donut Hole: How Expensive Are Cancer Drugs for Seniors with Medicare?