Generic Drug Savings in 2012 Medicare Plans

Several big-brand drugs are set to lose patent protection, triggering price drops.

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Healthcare costs have been rising faster than overall prices, but some prescription-drug relief is on the way. Over the next few years, an abnormally large number of blockbuster drugs are scheduled to lose their patent protection, opening the doors to cheaper generic drugs. With this year's earlier Medicare enrollment period—October 15 through December 7—it makes sense to consider how your health insurance may be affected by generic drug prices.

[See 10 Ways to Boost Your Social Security Checks.]

Already, Medicare has projected that insurance premiums for Medicare's Part D prescription drug coverage will not rise in 2012. Savings from generic drugs are part of the cause, as are lower consumer drug costs mandated by the national health reform law.

The law includes measures to address a big gap in drug coverage known as the "donut hole." It makes consumers responsible for all drug costs once they've reached an initial coverage trigger (estimated at $2,930 in 2012, according to benefits' consultant Allsup) and extends until they've spent $4,700. Medicare beneficiaries in the donut hole will get a 14 percent discount on generic drugs (up from 7 percent in 2011) and a 50 percent discount on brand-name drugs (the same as in 2011).

Already, generics have become the dominant branch of the prescription-drug family. According to its annual study of U.S. medicine use, the IMS Institute for Healthcare Informatics reported that generics accounted for 78 percent of all prescriptions last year.

When a branded drug is joined in the market by its generic equivalent, prices fall rapidly and sharply. "Over 80 percent of a brand's prescription volume is replaced by generics within six months of patent loss," according to the IMS report.

[See Understanding Your 2012 Medicare Enrollment Statements.]

Last year, the average co-pay for a generic drug prescription was $6.06, while the average co-pay for a brand-name drug prescription was about four to six times higher, depending on the type of branded drug being prescribed.

Medco Health Solutions, a large provider of pharmacy services, maintains a list of the major patent expirations set to occur during the remainder of 2011 and 2012. The biggest drug set to lose protection in 2011 is Lipitor, the cholesterol-reducing medication, which goes off patent in November. In 2012, several big drugs will go generic, including Actos, Plavix, Seroquel, and Singulair (see details below).

Here are the major-brand drugs that will lose patent protection over the coming 20 months. For each drug, the information includes the date it comes off patent, the drug's generic name, its 2009 retail sales, and a brief description of the drug's treatment use, provided by Medco.

[See Medicare Drug Premiums Won't Rise in 2012.]

2011

May: Concerta (methylphenidate); $1.33 billion. Used for ADHD (attention deficit) in teens.

June: Levaquin (levofloxacin); $1.63 billion. An antibiotic used for treating bacterial infections.

October: Zyprexa (olanzapine); $1.97 billion. Used for treatment of schizophrenia and bipolar disorder.

November: Lipitor (atorvastatin) ; $6.05 billion. Used for treating cholesterol.

2012

March: Lexapro (escitalopram); $2.56 billion. Used for treating depression.

March: Seroquel (quetiapine); $3.48 billion. This is an antipsychotic medication.

May: Plavix (clopidogrel); $4.56 billion. Used to prevent unwanted blood clots to avoid heart attacks and strokes.

July: Tricor (fenofibrate); $1.35 billion. Helps reduce cholesterol and triglycerides (fatty acids) in the blood.

August: Singulair (montelukast); $3.47 billion. Used for asthma and allergies.

August: Actos (pioglitazone); $2.78 billion. This is an oral diabetic medication.

September: Diovan (valsartan); $1.47 billion. See below.

September: Diovan HCT (valsartin/hydrochlorothiazide); $1.38 billion. These drugs are used for the treatment of hypertension.

Twitter: @PhilMoeller