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How much can the cost of a common generic drug vary between Medicare Part D plans and pharmacies?



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Question: How much can the cost of a common generic drug vary between Medicare Part D plans and pharmacies?
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Answer: Medicare Part D plans (or their pharmaceutical benefit manager, PBM) set the retail prices for your formulary drugs at each standard and preferred network pharmacy.  So retail prices can vary week-to-week, between preferred and standard pharmacies, between preferred network pharmacies, and between standard network pharmacies - and certainly at non-network pharmacies.  And a Medicare drug plan will also establish cost-sharing at standard and preferred network pharmacies based on the drug's formulary tier.   Please see our four Medicare.gov Plan Finder examples below showing how retail pricing and cost-sharing can vary between pharmacies and Medicare Part D plans.

Related Question: If my drug has a specific Quantity Limit (say, 30 pills for 30 days), and my Medicare Part D plan grants my Formulary Exception for 120 pills for 30 days, will this QL exception affect my coverage cost or actual cost-sharing?

In the following four examples, the Medicare.gov Plan Finder shows no impact of Quantity Limits on cost-sharing. However, you will note that the retail cost of the prescription drugs are affected by the quantity of the prescription. For example, the retail cost for a quantity of 120 tablets is approximately 4x the retail cost of the 30 tablet prescription. And since you enter the Coverage Gap or Donut Hole based on the retail value of your formulary drug purchases, you should move more quickly toward the Donut Hole when you increase the quantity of your prescription.


The following examples were randomly chosen from 2019 Medicare Part D plans available in Florida - the actual retail price data and cost-sharing calculations were compiled from the official Medicare.gov Plan Finder (as of 12/07/2018)
  • Example 1: Showing that you may have a higher retail price at a preferred pharmacy, you will pay a significantly higher co-pay at a standard pharmacy, but you never pay more than retail when your higher co-pay is more than your plan's retail drug price, the plan's Quantity Limit (QL) for this drug affects the total retail drug cost - but not your co-pay.  Notice that the Catastrophic Coverage price is often the actual low retail drug price since the retail price is more than 5% of the retail price, but still less than the minimum $3.40 price for generics in the 2019 Catastrophic Coverage phase - and, again, you will not pay more than retail.

  • Example 2: Also showing that retail drug prices can even vary between two preferred network pharmacies, although the co-pays are consistent across all preferred pharmacies.

  • Example 3: Without the usage management restriction of a Quantity Limit, the retail cost calculation provided by Medicare.gov shows the same multiple of 4x 30-day retail drug costs (as we saw with plans having a QL).  And, as expected, negotiated retail drug price can vary between standard network pharmacies, although fixed co-pays remain the same between standard pharmacies.

  • Example 4: Shows pricing at a preferred network pharmacy as compared to the retail drug costs at an out-of-network pharmacy, although we doubt anyone would pay the prices showing in this example (over 10x the preferred pharmacy prices), but people would instead probably not use their Medicare Part D plan and simply pay the pharmacy's everyday low prices or use a Discount Drug Card prices for these low-costing generics.

How are Initial Deductible, Donut Hole, and Catastrophic Coverage Costs calculated in these examples?

Initial Deductible costs
All four of our chosen example 2019 Medicare Part D plans exclude low-costing Tier 1 and Tier 2 drugs from the ($415) initial deductible  - so in all of the examples, the Medicare Part D prescription drug plan provides immediate coverage even before the standard initial deductible is met.

Costs in the 2019 Donut Hole
The chosen medication is a generic drug and will receive the 63% Donut Hole discount (for 2019) and you will pay 37% of the generic drug's negotiated retail price.  The four example Medicare plans do not offer any additional coverage in the Donut Hole, so you would pay 37% of the retail drug cost.

Catastrophic Coverage costs
In 2019, if you exit the Donut Hole or Coverage Gap, you will pay the higher of either 5% of the drug's retail price or $3.40 for generic or preferred drug that is a multi-source drug and $8.50 for all other drugs (such as brand name drugs.  In our examples, you can see that the Medicare.gov site shows Catastrophic Coverage costs for this generic as $3.40 - or the actual retail price is paid in Catastrophic Coverage when the actual retail price is less than the standard $3.40 co-pay for generics, but still greater than 5% of the retail drug price.

Example 1:   Please notice that the retail drug price at the Preferred Network Pharmacy is actually higher than the retail drug price at the standard network pharmacy.  However, the cost-sharing for this Tier 1 Preferred Generic is $1 at a preferred pharmacy and $10 at a standard network pharmacy.  You can see that the retail cost at the standard retail pharmacy is significantly lower than the $10 co-pay, and since you never pay more than the negotiated retail price, you pay the retail price - and not the $10 co-pay.

This Medicare Part D plan also has the usage management restriction of a 30 tablet / 30 days Quantity Limit (QL).  If the QL can be exceeded (for example, if the plan allows120 tablets / 30 days), the retail price increases by a factor of the QL, but the coverage cost, even for the excess amount of  medication, does not change.

Comparison of Drug Cost-Sharing Across Quantities, Phases of Coverage, and Pharmacies
2019 Express Scripts Medicare - Saver (PDP) (S5660-227-0)
with Quantity Limit (QL) of 30 tablets per 30 days
  Walgreens #11481 - Standard Retail Cost Sharing Walmart Pharmacy 10-2727 - Preferred Retail Cost Sharing
  Full Retail Deduct- ible Initial Coverage Phase Cover-age Gap Cata- strophic Coverage Full Retail Deduct- ible Initial Coverage Phase Cover- age Gap Cata- strophic Coverage
Atorvastatin Calcium TAB 10MG - 30 tablets $2.44 $2.44 $2.44 $0.90 $2.44 $2.93 $1.00 $1.00 $1.08 $2.93
Atorvastatin Calcium TAB 10MG - 120 tablets $8.08 $8.08 $8.08 $2.99 $3.40 $8.57 $1.00 $1.00 $3.17 $3.40
Atorvastatin Calcium TAB 20MG - 30 tablets $5.65 $5.65 $5.65 $2.09 $3.40 $6.14 $1.00 $1.00 $2.27 $3.40
Atorvastatin Calcium TAB 20MG - 120 tablets $20.92 $10.00 $10.00 $7.74 $3.40 $21.41 $1.00 $1.00 $7.92 $3.40


Example 2:  In this example, we see that two preferred network pharmacies can also have different retail prices, although the cost-sharing for this Tier 2 (Generic) is the same at all preferred pharmacies.

Comparison of Drug Cost-Sharing Across Quantities, Phases of Coverage, and Pharmacies
Cigna-HealthSpring Rx Secure-Essential (PDP) (S5617-290-0)
with Quantity Limit of 30 tablets per 30 days
  Walgreens #11481 - Preferred Retail Cost Sharing Walmart Pharmacy 10-2727 - Preferred Retail Cost Sharing
  Full Retail Deduct- ible Initial Coverage Phase Cover-age Gap Cata- strophic Coverage Full Retail Deduct- ible Initial Coverage Phase Cover- age Gap Cata- strophic Coverage
Atorvastatin Calcium TAB 10MG - 30 tablets $3.38 $3.00 $3.00 $1.25 $3.38 $3.00 $3.00 $3.00 $1.11 $3.00
Atorvastatin Calcium TAB 10MG - 120 tablets $11.53 $3.00 $3.00 $4.27 $3.40 $8.55 $3.00 $3.00 $3.16 $3.40
Atorvastatin Calcium TAB 20MG - 30 tablets $3.00 $3.00 $3.00 $1.11 $3.00 $3.00 $3.00 $3.00 $1.11 $3.00
Atorvastatin Calcium TAB 20MG - 120 tablets $9.99 $3.00 $3.00 $3.70 $3.40 $8.55 $3.00 $3.00 $3.16 $3.40


Example 3:  In this example, we do not have the usage management restriction of a Quantity Limit.  So the plan member with a larger prescription (120 tablets / 30 days) would not need to file a formulary exception to receive this additional amount.  The retail cost calculation provided by Medicare.gov shows the same multiple of 4x 30 day costs.

We also see that the negotiated retail drug price can also vary between standard network pharmacies, although the Tier 1 (Preferred Generic) cost sharing of $3 remains consistent between standard pharmacies.

Comparison of Drug Cost-Sharing Across Quantities, Phases of Coverage, and Pharmacies
WellCare Value Script (PDP) (S4802-146-0)
with No Quantity Limit
  Walgreens #11481 - Standard Retail Cost Sharing Walmart Pharmacy 10-2727 - Standard Retail Cost Sharing
  Full Retail Deduct- ible Initial Coverage Phase Cover-age Gap Cata- strophic Coverage Full Retail Deduct- ible Initial Coverage Phase Cover- age Gap Cata- strophic Coverage
Atorvastatin Calcium TAB 10MG - 30 tablets $4.61 $3.00 $3.00 $1.71 $3.40 $6.60 $3.00 $3.00 $2.44 $3.40
Atorvastatin Calcium TAB 10MG - 120 tablets $16.93 $3.00 $3.00 $6.26 $3.40 $24.90 $3.00 $3.00 $9.21 $3.40
Atorvastatin Calcium TAB 20MG - 30 tablets $6.46 $3.00 $3.00 $2.39 $3.40 $9.36 $3.00 $3.00 $3.46 $3.40
Atorvastatin Calcium TAB 20MG - 120 tablets $24.63 $3.00 $3.00 $9.01 $3.40 $35.92 $3.00 $3.00 $13.29 $3.40


Example 4:  In this example, you can see that at the preferred network pharmacy, there is a higher retail drug price, even when compared to standard pharmacies in our other examples.  We also can see that the Out-of-Network retail costs are over 10x the preferred pharmacy prices.  In most cases, people would not pay such high prices, and would instead pay the pharmacies "every day low prices" without using their Medicare Part D coverage - or people could use a pharmacy Drug Discount card at this non-network pharmacy.  Please note that the Medicare.gov site shows no coverage at a non-network pharmacy, except for the 37% Donut Hole discount. (This may be considering the requirement that "Part D sponsors shall provide the applicable discount for out-of-network paper claims submitted by Part D enrollees." ).

Comparison of Drug Cost-Sharing Across Quantities, Phases of Coverage, and Pharmacies
AARP MedicareRx Walgreens (PDP) (S5921-383-0)
with Quantity Limit of 30 tablets per 30 days
  Walgreens #11481 - Preferred Retail Cost Sharing Walmart Pharmacy 10-2727 - Out-of-Network Pharmacy Retail Cost Sharing
  Full Retail Deduct- ible Initial Coverage Phase Cover-age Gap Cata- strophic Coverage Full Retail Deduct- ible Initial Coverage Phase Cover- age Gap Cata- strophic Coverage
Atorvastatin Calcium TAB 10MG - 30 tablets $9.57 $0.00 $0.00 $3.54 $3.40 $106.40 $106.40 $106.40 $39.37 $106.40
Atorvastatin Calcium TAB 10MG - 120 tablets $34.67 $0.00 $0.00 $12.83 $3.40 $425.59 $425.59 $425.59 $157.47 $425.59
Atorvastatin Calcium TAB 20MG - 30 tablets $13.86 $0.00 $0.00 $5.13 $3.40 $152.30 $152.30 $152.30 $56.35 $152.30
Atorvastatin Calcium TAB 20MG - 120 tablets $51.85 $0.00 $0.00 $19.18 $3.40 $609.20 $609.20 $609.20 $225.40 $609.20



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