Medicare Part D Incurs Substantial Savings with Generics, CBO Says

If the current rate of generic substitution is maintained, first-time generic entry occurring through 2012 will generate about $14 billion in additional savings from generic substitution—in addition to the $33 billion in savings, it added.

The CBO report did note that spending under Part D on the category of drugs called biologics could to increase rapidly in the future. However, most biologics, which can run reach prices of tens of thousands of dollars per patient each year, are more likely to be covered under Part B of Medicare because they are injected or infused directly into the patient. Biologics accounted for only about 6% of total prescription drug costs under Part D in 2007.