Health Reform WK-EDGE Commonly used drugs account for disproportionate share of total costs
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Monday, June 3, 2019

Commonly used drugs account for disproportionate share of total costs

By Robert B. Barnett Jr., J.D.

A Kaiser Family Foundation analysis of prescription drug spending has found that the top five most commonly used drugs account for more than 10% of total annual prescription drug spending.

The top five drug products with the highest total spending account for more than 10% of total prescription drug spending, according to a Kaiser Family Foundation (KFF) analysis of prescription drug spending and use by large employer plans, Medicare Part D, and Medicaid. Which drugs those were, however, varied by plan type, perhaps reflecting the different beneficiary populations. The highest spending by Medicare Part D and Medicaid was for Harvoni®, for hepatitis C, while the highest spending by large employer plans was for Humira®, for rheumatoid arthritis.

Total spending. The analysis found that total U.S. retail prescription drug spending in 2017 was $333 billion (after rebates). Of that amount, 42%, or $140 billion, was paid by private health insurance, 30%, or $101 billion, was paid by Medicare Part D, and 10%, or $33 billion, was paid by Medicare. An additional 14%, or $47 billion, was paid out of pocket by beneficiaries. The final 4% was paid by "other payers." Retail prescription drug spending accounted for 13% of all personal health care spending for private health insurance, 15% for Medicare, and 6% for Medicaid.

Most expensive. The analysis also found that a few of the most expensive drugs accounted for a disproportionate share of total prescription drug spending, although which drugs those were differed among the payor types. The five most expensive drugs accounted for 13% of all prescription drug spending for large employers, 10% for Medicare Part D, and 10% for Medicaid. Those top five drugs for large employer plans, in order, were Humira, Enbrel® (tuberculosis), Copaxone® (multiple sclerosis), Tecfidera® (multiple sclerosis), and Harvoni. The top five for Medicaid Part D were Harvoni, Revlimid® (cancer), Lantus Solostar® (diabetes), Januvla® (diabetes), and Crestor (high cholesterol). The top five for Medicare were Harvoni, Humira, Abilify (schizophrenia and bipolar disorder), Vyvanse (ADHD), and Latuda (bipolar disorder).

Most commonly prescribed. Antibiotics and asthma/allergy drugs were the most commonly used drugs in large employer plans, while high blood pressure and high cholesterol were the most commonly used drugs in Medicare Part B. The single most commonly used drug in large employer plans was amoxicillin, while the single most commonly used drug in Medicare Part B was atorvastatin calcium (the generic for Lipitor®). Similar numbers were not provided for Medicaid.

Spending per user. Two hepatitis C treatments, Sovaldi® and Harvoni, were both among the top 10 prescription drug products by total spending per user for both large employer plans and for Medicare Part D. Both Sovaldi and Harvoni had total spending per user in excess of $70,000. Cancer drugs, including Revlimid, Ibrance®, and Gleevac®, were also among the most expensive, with total spending of at least $60,000 per user per year.

Out-of-pocket per user. Drugs to treat cancer, multiple sclerosis, and rheumatoid arthritis had the highest average out-of-pocket spending per user for both large employer plans and Medicare Part D, although where the drugs fell on the list were different. For large employer plans, the highest out-of-pocket for any single drug was for Xyrem®, for narcolepsy, with an average out-of-pocket of $1,568. The highest for Medicare Part D enrollees was for Harvoni, with an average out-of-pocket of $5,235.

Average out-of-pocket. Medicare Part D enrollees paid a total annual out-of-pocket average for prescription drugs ($365) that was higher than the average for large employer plans participants ($132). The numbers were not surprising given that the Medicare Part D population is generally taking far more prescription drugs than the large employer plan population. What was perhaps surprising was that the KKF analysis found that those averages had actually both decreased between 2007 and 2016. The comparable 2007 numbers were $423 and $159.

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