What Medicare beneficiaries need to know about generic medications

That’s why it’s important to do your research before buying a generic and enrolling in a Medicare drug plan. Unfortunately, it isn’t easy.

Fearing the generics problem her dad had 

Just ask Susan Jaquith, a retired teacher in Wilson, N.C., who’d been paying about $2,000 a year for a brand-name blood pressure medication and wanted to switch to a less expensive generic. But she was nervous. Her late father got severe bronchitis when he replaced the same medication with a generic.

“My doctor said it was very likely I would have the same issue,” Jaquith said. “And he actually was right.”

After she started the generic, “I woke up with this deep chest cough,” Jaquith recalled. So, she decided to look for a different generic that wouldn’t have the same side effect.

Her research on the National Library of Medicine’s DailyMed.gov site showed that some of the drug’s generics came with inactive ingredients and some didn’t.  

After ultimately finding an alternative without potentially problematic ingredients and a pharmacy that would get that generic for her, she ordered it. Jaquith has been taking the pill—with no bronchitis—ever since, saving a bundle.

“I pay maybe $200 a year for my blood-pressure generic,” said Jaquith.

What can make similar generics different

Her experience raises the question: How can two generics for the same brand-name medication be different? After all, the Food and Drug Administration (FDA) says generics “are created to be the same as an already marketed brand-name drug in dosage form, safety, strength, route of administration, quality, performance characteristics, and intended use.”

But generics can be different in two important ways.

One is what Jaquith experienced: Some have inactive ingredients which are generally not a problem for people taking them but can be for people with allergies or sensitivities.

Another difference is where and how the generic was manufactured, which was the subject of Katherine Eban’s 2019 generic-industry exposé, Bottle of Lies.

About a third of generics and nearly half of active ingredients in generics are from India and China. Eban found the FDA inspection process there can be problematic.

Concerns about FDA inspections

“In the U.S., the FDA shows up unannounced and stays as long as is needed,” Eban tells Fortune. “Overseas, the FDA gets invited to do inspections, giving months of advance notice to companies who go in, create a Potemkin village of compliance, clean up fake data and shred incriminating documents. The whole system of overseas inspections is completely broken.”

Fortune reached out to the FDA about their overseas inspections. A spokesperson said, “The FDA uses risk-based approaches to identify foreign and domestic facilities for inspection and conducts both announced and unannounced inspections. For announced inspections, foreign facilities are typically provided with up to 8-12 weeks’ notice in advance. When warranted, FDA conducts foreign inspections with little or no notice to the facility, and we will continue to do so as necessary in line with our risk-based inspection approach. We also conduct inspections with only 24 hours-notice to the facility.” 

Eban isn’t warning Medicare beneficiaries against taking any generic. She takes the pills herself. “The issue is how can consumers get high-quality generics and how can the FDA guarantee that they’re high quality?”

She’s especially concerned about foreign manufacturing of time-release generics, such as ones for ADHD. “The time-release formula can be very tricky to duplicate,” Eban says.

The transparency problem with generics

She’s angry that it’s so hard to know where generics are made.

“You can walk into Whole Foods and find out where your apple came from and how many miles it flew, but you can’t find out where your generic drugs were manufactured,” Eban says.

The package generally notes the name of the generic’s manufacturer, its headquarters and possible side effects, but not where the active ingredients and finished product were manufactured. “That information is not available to consumers,” says Eban. “It’s impossible.”

Well, nearly.

Michael Sargent, senior director of policy at Association for Accessible Medicines (the generics trade group), notes that the packages have a National Drug Code, or NDC, number on them. It can tell you about the manufacturer and the packager if you look the number up on the FDA website.

But Sargent concedes “that’s not a number I think most patients would immediately look at and say, ‘Okay, I’m going to query this NDC number and figure that out.’”

One piece of encouraging news, says Eban: Pharmaceutical companies are increasingly making generics in the U.S., where the FDA’s supervision is stricter.

How to do your generics research

To learn about a generics and their potential side effects, Sargent and Eban recommend talking to your pharmacist. Eban suggests not overlooking community pharmacies.

For hands-on research, there’s the DailyMed.gov site Jaquith used, which has information on over 148,000 drug package inserts, and the guide Eban created for her own site, “A Guide to Investigating Your Own Drugs.” The Drugs@FDA area of the FDA’s site lets you see if there’s any generic version of your brand-name medicine.

Eban is a fan of using the FDA site’s “Orange Book,” which lets you search generics by a medication’s name, active ingredients or number and then see if the agency issued any warning letters about it.

She also recommends looking for an “authorized generic,” which means it’s been authorized by the brand-name company and is likely to be made with the same formula and ingredients.

What’s happening with the cost of generics

The price of generics can vary greatly, too, and Medicare beneficiaries are getting pinched.

Although the average price of a generic prescription covered by Medicare Part D plans is $17 and has fallen since 2009, according to the Congressional Budget Office, 12% of Medicare beneficiaries filled at least one generic prescription for over $20 in 2022.

Part D insurers have increasingly been moving generics out of Medicare’s Tier 1 status (for the lowest-cost medications) and into Tier 3 (a mix of high-priced generics and the lowest-cost brand-name drugs).

“In 2011, 73% of generic medications covered in Medicare Part D were placed on Tier 1, where cost-sharing [by beneficiaries] averages out to zero. In 2021, that dropped to 15%,” says Sargent.

The average out-of-patient cost for Tier 3 medications is $42, according to the health policy research firm KFF.

Many of the most-expensive generics aren’t offered by the disruptor direct-to-consumer startups like Mark Cuban’s Cost Plus Drugs or Amazon, according to a 2024 study in the Journal of General Internal Medicine.

What’s more, some generics aren’t covered by certain Part D plans, raising the cost for people who need them.

The Biden administration is working on a pilot program that would create a Medicare program capping cost-sharing at $2 a month for a 30-day supply of 150 essential generics (ones for chronic conditions like hypertension) without prior authorization.

Advice for Part D plan shopping

When Medicare Open Enrollment for 2025 starts in October, experts advise, use the Plan Finder tool on Medicare’s site to compare generics policies of plans you’re considering.

You’ll want to see whether a plan covers your generics and how much you’ll pay for them.

Keep in mind that in 2025, there will be a $2,000 out-of-pocket cap for a plan’s covered prescriptions. This may help keep a lid on the costs of brand-name and generic medications, Sargent says, since once you exceed the $2,000 threshold, the Plan D insurer will need to pay the overage.