Differences Between Managed Care and Fee-for-Service Medicaid in the Use of Generics for High-Rebate Drugs: The Cases of Insulin Glargine and Glatiramer

BACKGROUND: Statutory rebates and preferred drug lists (PDLs) may result in differential use of biosimilars and generics between Medicaid fee-for-service (FFS) and managed care organizations (MCOs), particularly for branded drugs with large price increases subject to large inflation rebates, which are not retained by MCOs. OBJECTIVE: To compare the use of 2 biosimilar/generics of branded drugs whose list price tripled in 2008-2018 across states with only FFS Medicaid, with MCOs not subject to statewide PDLs, with MCOs subject to statewide PDLs, and with MCOs where drug benefits have been carved out. METHODS: Using 2018 Medicaid drug utilization data, we extracted reimbursement records in Q1-Q3 2018 for insulin glargine 100 IU/mL and glatiramer. We calculated the market share of the biosimilar insulin glargine and generic glatiramer among the corresponding drugs. We compared the market share of these products across 4 state groups: states with only FFS Medicaid, states with MCOs not subject to statewide PDLs for each drug, states with MCOs subject to PDLs, and states with MCOs where drug benefits have been carved out into FFS. We evaluated the correlation between state-level penetration of MCOs and share of biosimilar/generic products. RESULTS: Nationally, the market share of these biosimilar/specialty generics was higher among MCOs than FFS (60.5% vs. 3.7% for biosimilar insulin glargine; 59.4% vs. 5.7% for generic glatiramer; all P < 0.001). The market share of these products was highest in states where MCOs were not subject to statewide PDLs for these drugs (59.1% for biosimilar insulin glargine, 52.8% for glatiramer) compared with states with MCOs subject to PDLs (2.4%, 18.0%); states with only FFS Medicaid (0.9%, 1.7%); or states where drug benefits have been carved out of MCOs (0.0%, 1.0%; all P < 0.001). There was a significant correlation between state-level MCO penetration and share of generic/biosimilar products (R = 0.50 for biosimilar insulin glargine and 0.57 for glatiramer; all P < 0.001). CONCLUSIONS: For 2 drug classes with large price increases, use of biosimilars/generics was greater in MCOs than FFS Medicaid, specifically in states without PDL requirements for MCOs. These findings may reflect financial incentives for MCOs to use drugs with lower list prices because they do not benefit from statutory Medicaid rebates.