Medication Literacy Series: Generic Drugs

Generic drugs, the lower-cost versions of brand-name drugs that enter the market after a brand-name drug’s monopoly period ends, have come to assume a growing portion of the US drug market. In 1994, generic drugs accounted for just 34 percent of all prescriptions filled in the US; today, 90 percent of all prescriptions are for generic drugs. In Medicare Part D, generic drug utilization increased from 72 percent to 90 percent between 2009 and 2018.

The high utilization of lower-priced generic drugs among older adults has resulted in significant savings to the health system, estimated at $338 billion in 2020 with $110 billion attributable to Medicare alone.

Still, not all older adults are seeing generic drug-related savings. Due to a variety of reasons, some older adults continue to take brand name drugs when generics are available. An estimate of Medicare Part D utilization in 2016 showed that beneficiaries could have saved over $600 million in out-of-pocket costs if they had taken a generic rather than the brand.

This fact sheet reviews some potential barriers that older adults face when accessing generic drugs.

Generic Substitution

All generic drugs reach consumers through substitution, whether by a provider or a pharmacist. However, a large number of consumers do not discuss generic substitution with their prescribing provider, a situation that hasn’t improved much over the past two decades. In a 2007 survey of commercially insured beneficiaries, only one-third of adults reported asking their provider about substitution most of the time. In a 2016 survey of adults with chronic conditions, fewer than half (46 percent) of the respondents discussed the substitution of a generic drug for a brand. 

Recognizing a Generic Drug’s Name

Another potential challenge is patients’ ability to identify their drugs by name. Studies show that identification of a drug by name (including in combination with other identifiers, e.g., pill color, size, or shape) is connected to higher drug adherence and greater health outcomes. Yet, identifying a drug by name may be challenging. One study of older adults showed that more than 80 percent of participants were unable to identify all of their medications by name. 

Part of the challenge may be the generic names. While manufacturers develop generic drug names by following a specific naming convention that prioritizes patient safety, the approved names may seem strange, unfamiliar, hard to read, confusing, and/or difficult to remember for consumers.

Generic Medication Labels Vary

State regulations around what drug name or names must appear on a label, as well as how the name(s) should appear, may add to further consumer misunderstanding of generic drugs. There is significant variation, and the lack of standards to support a given format could make it more difficult for individuals to navigate a label and isolate the name of the generic drug.

Limited Medication Literacy

Millions of older adults—over half (59 percent) of adults ages 65 and older and one-third (34 percent) of adults ages 50 to 64—have inadequate or limited levels of medication literacy, which is the ability to obtain information about medication, process it, and use the information to make medication decisions.  These limitations can compound the challenges older adults face when understanding and using generic drugs. For example, in a study that examined drug identification and limited literacy, only 38 percent of older adults with limited literacy could identify their hypertension medication by name.

Biosimilars

One additional potential barrier to understanding and using generics is the rise of biosimilar drugs, the generic versions of biologic drugs that have no clinically meaningful differences from their brand-name counterparts. Biosimilars currently represent a 30 percent discount on biologics, many of which have annual prices that exceed $30,000 per year, and have the potential to greatly reduce health system and consumer spending. Twenty-two biosimilars have come onto the US drug market so far, and this number is expected to grow substantially as more brand-name biologic patents expire.

Consumer awareness of biosimilars has evolved slowly. In a 2020 survey of biosimilar perceptions, 39 percent of providers reported that some or all of their patients were aware that biosimilars existed. At the same time, 40 percent of providers acknowledged that they rarely or never talk with their patients about biosimilars, despite those patients already taking one or more biologic drugs.

Policies and practices that help older adults recognize the value of generics (and biosimilars), communicate with providers about the possibility of generic and biosimilar substitution, and identify by name the generic drugs in their medication regimens would help eliminate these generic drug access barriers.