Benefit Design And Biosimilar Coverage In Medicare Part D: Evidence And Implications From Recent Reforms.

There is substantial disparity between Medicare Part D and employer-sponsored health insurance plans in the coverage of biosimilars and their reference biologics. These disparities may be due to design elements of Part D plans that encourage the adoption of more expensive biologic drugs. We undertook several analyses to illustrate the dynamics of benefit design incentives over time, compare formulary coverage in Part D plans with that of employer-sponsored plans, and study how the Bipartisan Budget Act of 2018 affected Part D formulary coverage. Using these analyses of Part D reforms enacted through the Bipartisan Budget Act, we discuss the implications of elements of the Inflation Reduction Act of 2022 that will be implemented in 2025. Biosimilar coverage increased by 23 percentage points five quarters after the Bipartisan Budget Act was implemented. We predict that the Inflation Reduction Act will also have a positive effect on biosimilar coverage. Given ample evidence of a relationship between drug coverage and utilization, our results suggest that Medicare patients and the federal government could realize substantial savings if Part D formularies resembled those of employer-sponsored plans.

Patient Out-of-Pocket Costs for Biologic Drugs After Biosimilar Competition.

Importance: Biologic drugs account for a growing share of US pharmaceutical spending. Competition from follow-on biosimilar products (subsequent versions that have no clinically meaningful differences from the original biologic) has led to modest reductions in US health care spending, but these savings may not translate to lower out-of-pocket (OOP) costs for patients. Objective: To investigate whether biosimilar competition is associated with lower OOP spending for patients using biologics. Design, Setting, and Participants: This cohort study used a national commercial claims database (Optum Clinformatics Data Mart) to identify outpatient claims for 1 of 7 clinician-administered biologics (filgrastim, infliximab, pegfilgrastim, epoetin alfa, bevacizumab, rituximab, and trastuzumab) from January 2009 through March 2022. Claims by commercially insured patients younger than 65 years were included. Exposure: Year relative to first biosimilar availability and use of original or biosimilar version. Main Outcomes and Measures: Patients' annual OOP spending on biologics for each calendar year was determined, and OOP spending per claim between reference biologic and biosimilar versions was compared. Two-part regression models assessed for differences in OOP spending, adjusting for patient and clinical characteristics (age, sex, US Census region, health plan type, diagnosis, and place of service) and year relative to initial biosimilar entry. Results: Over 1.7 million claims from 190 364 individuals (median [IQR] age, 53 [42-59] years; 58.3% females) who used at least 1 of the 7 biologics between 2009 and 2022 were included in the analysis. Over 251 566 patient-years of observation, annual OOP costs increased before and after biosimilar availability. Two years after the start of biosimilar competition, the adjusted odds ratio of nonzero annual OOP spending was 1.08 (95% CI, 1.04-1.12; P < .001) and average nonzero annual spending was 12% higher (95% CI, 10%-14%; P < .001) compared with the year before biosimilar competition. After biosimilars became available, claims for biosimilars were more likely than reference biologics to have nonzero OOP costs (adjusted odds ratio, 1.13 [95% CI, 1.11-1.16]; P < .001) but had 8% lower mean nonzero OOP costs (adjusted mean ratio, 0.92 [95% CI, 0.90-0.93; P < .001). Findings varied by drug. Conclusions and Relevance: Findings of this cohort study suggest that biosimilar competition was not consistently associated with lower OOP costs for commercially insured outpatients, highlighting the need for targeted policy interventions to ensure that the savings generated from biosimilar competition translate into increased affordability for patients who need biologics.

Impact of including drug spending in oncology alternative payment models.

OBJECTIVES: To develop a method for determining the effect of including drug costs in alternative payment models (APMs). STUDY DESIGN: Retrospective claims analysis. METHODS: Using the Oncology Care Model as an example, we developed an oncology episode payment model for a commercial payer using historical claims data. We defined 6-month episodes of chemotherapy. Using claims data, we characterized episodes and developed a risk adjustment model. We used bootstrapping to estimate the variation in episode cost with drugs included and without. RESULTS: Episode costs were approximately $100,000. Although absolute cost variation was higher when we included drugs, the percent of total cost represented by variation was lower. Under reasonable assumptions about potential savings from drug and nondrug spending, our results suggest that including drugs in APMs can improve the risk-benefit trade-off faced by provider groups. We introduce a risk-mitigated sharing rate that may enable inclusion of drugs in APMs without substantially increasing downside risk. CONCLUSIONS: We have developed a method to assess whether the inclusion of drug spending in APMs is a good decision for provider groups. Including drug costs in episode payments for oncology patients may be preferable for many provider groups.

Has The Era Of Slow Growth For Prescription Drug Spending Ended?

In the period 2005-13 the US prescription drug market grew at an average annual pace of only 1.8 percent in real terms on an invoice price basis (that is, in constant dollars and before manufacturers' rebates and discounts). But the growth rate increased dramatically in 2014, when the market expanded by 11.5 percent-which raised questions about future trends. We determined the impact of manufacturers' rebates and discounts on prices and identified the underlying factors likely to influence prescription spending over the next decade. These include a strengthening of the innovation pipeline; consolidation among buyers such as wholesalers, pharmacy benefit managers, and health insurers; and reduced incidence of patent expirations, which means that fewer less costly generic drug substitutes will enter the market than in the recent past. While various forecasts indicate that pharmaceutical spending growth will moderate from its 2014 level, the business tension between buyers and sellers could play out in many different ways. This suggests that future spending trends remain highly uncertain.