Low-cost generic program use by medicare beneficiaries: Implications for medication exposure misclassification in administrative claims data

Nathan J. Pauly, Jeffery C. Talbert, Joshua Brown

Research output: Contribution to journalArticlepeer-review

20 Scopus citations


BACKGROUND: Administrative claims data are used for a wide variety of research and quality assurance purposes; however, they are prone to medication exposure misclassification if medications are purchased without using an insurance benefit. Low-cost generic drug programs (LCGPs) offered at major chain pharmacies are a relatively new and sparsely investigated source of exposure misclassification. LCGP medications are often purchased out of pocket; thus, a pharmacy claim may never be submitted, and the exposure may go unobserved in claims data. As heavy users of medications, Medicare beneficiaries have much to gain from the affordable medications offered through LCGPs. This use may put them at increased risk of exposure misclassification in claims data. Many high-risk medications (HRMs) and medications tracked for adherence and utilization quality metrics are available through LCGPs, and exposure misclassification of these medications may impact the quality assurance efforts reliant on administrative claims data. Presently, there is little information regarding the use of these programs among a geriatric population. OBJECTIVES: To (a) quantify the prevalence of LCGP users in a nationally representative population of Medicare beneficiaries; (b) compare clinical and demographic characteristics of LCGP users and nonusers; (c) assess determinants of LCGP use and medications acquired through these programs; and (d) analyze patterns of LCGP use during the years 2007-2012. METHODS: This study relied on data from the Medical Expenditure Panel Survey (MEPS) from 2007 to 2012. The first 3 objectives were completed with a cohort of individuals in the most recent MEPS panel, while the fourth objective was completed with a separate cohort composed of individuals who participated in MEPS from 2007 to 2012. Inclusion in either study cohort required that individuals were Medicare beneficiaries aged 65 years or greater, used at least 1 prescription drug during their 2-year panel period, and participated in all 5 rounds of data collection during their panel period. MEPS captures medication utilization by surveying individuals on current and previous medication use and verifies this information at the pharmacy level, so prescription fills can be observed irrespective of payment by an insurer or a filed claim. Pharmaceutical utilization was assessed at the individual level for each year of the study period, and LCGP use was recorded as a binary variable for each individual. An LCGP medication fill was identified if the total cost of the drug was paid out of pocket and matched the cost of medications listed on LCGP formularies available from major pharmacy retailers during these years. Cohort demographics and characteristics of interest included age, gender, race, employment status, marital status, family income level, education level, residence in a metropolitan statistical area, geographic region, prescription drug coverage, Medicare type, comorbidities, number of unique medications used, and number of medication fills. Comparisons were made between users and nonusers using chi-square and t-tests. Multivariable logistic regression was used to identify factors associated with LCGP use. RESULTS: From the most recent MEPS panel, 1,861 individuals were included in the study cohort, of which 53.5[%] were observed to be LCGP users. The 995 LCGP users in this cohort represented over 20 million Medicare beneficiaries who used LCGPs from 2011 to 2012. Significant differences between LCGP users and nonusers existed in terms of race, educational attainment, comorbidity burden, type of Medicare insurance, number of unique medications used, and number of medication fills. Each additional unique medication filled increased the odds of LCGP use by 12[%] (95[%] CI = 1.09-1.14). Individuals with insurance in addition to Medicare (i.e., Tricare/Veteran's Affairs or Medicaid) had less than half the odds of using LCGPs compared with those with Medicare or Medicare managed care insurance coverage only. The proportion of LCGP users and the proportion of LCGP fills out of all medications available through LCGPs increased from 2007 to 2012. CONCLUSIONS: There is a high rate of LCGP use among Medicare beneficiaries aged 65 years or greater. Claims-based research and quality assurance programs focusing on the benefits and harms of medications available through these programs are at risk of underestimating the true medication exposure in this population and should account for this possibility in sensitivity analyses. Managed care organizations should incentivize the reporting of LCGP medication use or make adjustments to generic medication benefit structures to more effectively capture true medication exposure.

Original languageEnglish
Pages (from-to)741-751
Number of pages11
JournalJournal of Managed Care and Specialty Pharmacy
Issue number6
StatePublished - Jun 1 2016

Bibliographical note

Publisher Copyright:
© 2016, Academy of Managed Care Pharmacy.

ASJC Scopus subject areas

  • Pharmacy
  • Pharmaceutical Science
  • Health Policy


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