Effects Of Generic-Only Drug Coverage In A Medicare HMO

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Abstract
Rising pharmacy costs and demand for prescription drug coverage for broader populations of seniors have resulted in the implementation of generic-only pharmacy benefits in Medicare health maintenance organizations (HMOs). The impact on cost and quality of care is unknown. We examined data for members of a California Medicare HMO whose coverage changed to a generic-only benefit and found that the change was associated with reduced health plan pharmacy cost, increased out-of-pocket pharmacy costs for members, increased overall hospital admissions, changed drug-use patterns, and a negative impact on quality metrics for certain conditions. These findings have important implications for future research and health policy decisions.