Generic medications provide annual savings of billions of dollars to 43 million Medicare beneficiaries compared to brand-name drugs, often priced around 80% lower. However, assuming uniformity among generics in terms of side effects, manufacturing standards, pricing, and coverage under Part D prescription drug plans is incorrect.

Therefore, thorough research before purchasing generics or enrolling in a Medicare drug plan is crucial, although it can be challenging.

Fearing the generics problem her dad had 

Consider Susan Jaquith, a retired educator residing in Wilson, N.C., who had been spending approximately $2,000 annually on a brand-name blood pressure medication. Seeking a more economical alternative, she contemplated switching to a generic but harbored reservations. Her concerns were fueled by her late father’s experience of developing severe bronchitis after switching to a generic version of the same medication.

“My doctor warned me that I might encounter similar issues,” Jaquith recounted. “And indeed, he was correct.”

Upon commencing the generic medication, Jaquith experienced a persistent deep chest cough, prompting her to seek an alternative option devoid of such side effects. Through her research on the National Library of Medicine’s DailyMed.gov site, she discovered discrepancies among various generics of the medication, particularly in their inactive ingredients.

After diligent investigation, she identified a suitable alternative devoid of potentially troublesome ingredients and located a pharmacy willing to procure this specific generic. Since then, Jaquith has been consistently taking the medication without experiencing bronchitis, resulting in substantial cost savings.

“I now spend approximately $200 per year on my blood-pressure generic,” Jaquith revealed.

What can make similar generics different

Susan Jaquith’s encounter prompts the question: How can two generics of the same brand-name medication exhibit differences? Despite the FDA’s assertion that generics are designed to mirror brand-name drugs in various aspects, disparities can arise.

One aspect, as illustrated by Jaquith’s case, involves inactive ingredients. While generally innocuous for most individuals, these components can pose issues for those with allergies or sensitivities.

Another differentiating factor lies in the manufacturing process, a topic scrutinized in Katherine Eban’s 2019 exposé, “Bottle of Lies.” With a significant portion of generics and their active ingredients originating from India and China, Eban uncovered challenges in the FDA’s inspection procedures in these regions.

Concerns about FDA inspections

Katherine Eban highlights a stark contrast in the FDA’s inspection protocols between the U.S. and overseas facilities. While the FDA conducts unannounced visits and remains on-site for as long as necessary domestically, inspections abroad often involve advanced notice, allowing companies to potentially conceal non-compliance. Eban argues that this system is fundamentally flawed, as it permits foreign facilities to stage a facade of compliance, tamper with data, and discard incriminating evidence before inspections.

In response to inquiries from Fortune, an FDA spokesperson defends the agency’s approach, stating that they employ risk-based strategies to select facilities for inspection, both domestically and internationally. While foreign facilities typically receive 8-12 weeks’ notice for announced inspections, unannounced visits are also conducted when deemed necessary. Additionally, the FDA occasionally conducts inspections with as little as 24 hours’ notice to ensure compliance.

Eban clarifies that her concern isn’t to dissuade Medicare beneficiaries from using generics; in fact, she herself takes them. Rather, her focus is on ensuring the availability of high-quality generics and guaranteeing FDA oversight to maintain their quality standards. She emphasizes particular apprehension regarding the manufacturing of time-release generics, especially for conditions like ADHD, where duplicating the time-release mechanism accurately can be challenging.

The transparency problem with generics

Katherine Eban expresses frustration at the lack of transparency regarding the manufacturing origins of generic drugs. She contrasts this with the ease of obtaining information about the origins of products like fruits at stores such as Whole Foods. Despite generic drug packages typically listing the manufacturer’s name, headquarters, and potential side effects, details about where the active ingredients and final product were manufactured are often absent, leaving consumers in the dark.

According to Eban, this lack of information poses a significant challenge for consumers seeking transparency in their medication sources. However, Michael Sargent, the senior director of policy at the Association for Accessible Medicines, points out that each package includes a National Drug Code (NDC) number. By searching this number on the FDA website, consumers can potentially learn about the manufacturer and packager, although Sargent acknowledges that this process may not be intuitive for most patients.

Despite these obstacles, Eban finds hope in the trend of pharmaceutical companies increasingly producing generics in the United States. This shift is seen as promising because of the stricter oversight provided by the FDA within the country.

How to do your generics research

For insights into generics and their potential side effects, Sargent and Eban advise consulting your pharmacist, with Eban particularly highlighting the importance of considering community pharmacies.

For more hands-on research, resources like DailyMed.gov, which Jaquith utilized, offer extensive information on drug package inserts, encompassing over 148,000 entries. Additionally, Eban has developed a guide titled “A Guide to Investigating Your Own Drugs” available on her website. The Drugs@FDA section of the FDA’s website enables users to identify any generic versions of their brand-name medication.

Eban advocates for utilizing the FDA’s “Orange Book,” allowing users to search for generics by medication name, active ingredients, or number, while also providing insight into any warning letters issued by the agency. She also advises consumers to consider seeking out “authorized generics,” which are approved by the brand-name company and likely maintain the same formula and ingredients.

What’s happening with the cost of generics

The cost of generic medications can vary significantly, impacting Medicare beneficiaries. Despite the average price of a generic prescription covered by Medicare Part D plans decreasing to $17 since 2009, data from the Congressional Budget Office shows that in 2022, 12% of beneficiaries filled at least one generic prescription costing over $20.

There’s been a trend of Part D insurers shifting generics from Tier 1 (where cost-sharing is typically minimal) to Tier 3, which includes a mix of high-priced generics and the lowest-cost brand-name drugs. According to Michael Sargent, this shift has been notable, with only 15% of generic medications covered by Medicare Part D placed in Tier 1 in 2021, down from 73% in 2011.

The average out-of-pocket cost for Tier 3 medications is $42, as reported by the health policy research firm KFF. Additionally, certain Part D plans may not cover some generics, resulting in increased expenses for individuals who require them.

Moreover, a 2024 study published in the Journal of General Internal Medicine indicates that many of the most expensive generics are not offered by disruptive direct-to-consumer startups like Mark Cuban’s Cost Plus Drugs or Amazon.

To address these issues, the Biden administration is developing a pilot program aimed at capping cost-sharing at $2 per month for a 30-day supply of 150 essential generics, particularly those used for chronic conditions such as hypertension, without requiring prior authorization.

Advice for Part D plan shopping

During the start of Medicare Open Enrollment for 2025 in October, experts recommend utilizing the Plan Finder tool on Medicare’s website to compare policies regarding generics offered by various plans.

It’s important to determine whether a plan covers your specific generics and to understand the associated costs. Additionally, it’s noteworthy that in 2025, there will be a $2,000 out-of-pocket cap for covered prescriptions within a plan.

This cap is expected to help mitigate the costs of both brand-name and generic medications. Once you exceed the $2,000 threshold, the Plan D insurer will be responsible for covering any additional expenses, as highlighted by Sargent.