Examining Opportunities to Increase Savings From Medicare Price Negotiations.

Importance: Allowing the US Centers for Medicare & Medicaid Services to negotiate prescription drug prices for Medicare may improve drug affordability. Objective: To estimate savings from Medicare price negotiation under the Inflation Reduction Act (IRA) and examine opportunities to increase savings. Design, Setting, and Participants: This cross-sectional, population-based study used data from 2020 Medicare prescription drug claims. The study was conducted and data were analyzed in 2022. Exposures: Eligibility for Medicare price negotiation under the IRA and alternative criteria. Main Outcomes and Measures: Minimum savings under the IRA's eligibility criteria were estimated and compared with savings within alternative scenarios, including (1) selecting drugs for negotiation based on net spending after rebates rather than gross spending; (2) extending eligibility to drugs with biosimilar or generic competitors; (3) reducing the minimum years since US Food and Drug Administration approval for eligibility; and (4) changing 2 or 3 of these factors. Estimated savings were calculated at different levels of scale-up of price negotiation under the IRA, from 10 Part D drugs in 2026 to 60 Part B and D drugs in 2029. Gross spending was calculated using the US Centers for Medicare & Medicaid Services 2020 Medicare drug spending dashboard. Rebates were estimated using SSR Health data. Information on FDA approvals, generics, and biosimilars was obtained from FDA websites. Results: Under IRA rules, estimated minimum savings from price negotiation in 2026 for 10 Part D drugs would be $3.2 billion. For 2029 for 60 Part D and B drugs, estimated savings were $16.0 billion. Selecting drugs for negotiation based on net rather than gross spending would be associated with estimated savings of $4.6 billion (a 45% increase) in 2026 and $18.9 billion (an 18% increase) in 2029. Including drugs with generic competitors or biosimilars would be associated with an estimated savings of $6.6 billion (a 109% increase) in 2026 and $24.9 billion (a 56% increase) in 2029. Making both changes would be associated with savings of $9.5 billion (a 200% increase) in 2026 and $28.3 billion (a 77% increase) in 2029. A sensitivity analysis suggested that reducing the required number of years since marketing approval by 2 years would be associated with increased estimated savings of 4% when 10 Part D drugs are negotiated and 12% when 60 Part D and B drugs are negotiated. Changing all 3 criteria would be associated with the greatest increase in estimated savings in 2029 (119% increase when 10 Part D drugs are negotiated and 93% increase for 60 Part D and B drugs). Conclusions and Relevance: The results of this cross-sectional study suggest that adjusting the eligibility criteria for Medicare prescription drug price negotiation to permit inclusion of drugs with biosimilar or generic competitors and selecting drugs based on net rather than gross spending may be a promising approach to substantially increase estimated savings.

Trends of Prescription Drug Manufacturer Rebates in Commercial Health Insurance Plans, 2015-2019.

This economic evaluation examines the magnitude and trend of prescription drug rebates in commercial markets from 2015 to 2019 and identifies insurance plan factors associated with rebates.

Allocation of National Institutes of Health Funding by Disease Category in 2008 and 2019.

Importance: Prior research suggests an association between burden of disease and National Institutes of Health (NIH) funding. The allocation of NIH funding should reflect, to some extent, the health needs of the population, along with other factors. Objective: To examine the factors associated with NIH funding in 2019 for 46 diseases. Design, Setting, and Participants: This cohort study used disability-adjusted life-years to measure the 2008 and 2019 US burden of disease and compared them with NIH categoric funding for 46 diseases. Exposures: Disability-adjusted life-years to measure the 2008 and 2019 US burden of disease, 2016 health spending, and 2008 NIH funding levels for 46 diseases. Main Outcomes and Measures: 2019 NIH funding levels for 46 diseases. Results: The 46 diseases accounted for 62 392 713 of 94 399 784 disability-adjusted life-years (66.1%) in 2008 and 75 706 718 of 111 074 472 disability-adjusted life-years (68.2%) in 2019, representing more than 66% of all disability-adjusted life-years in both years. By dollar volume, Alzheimer and dementia increased the most, with approximately $1.8 billion more funding in 2019 than 2008 (from $530 million in 2008 to $2398 million in 2019, a 352% increase), whereas interpersonal violence had the greatest decrease, $95 million, in 2019 NIH funding (from $236 million in 2008 to $141 million in 2019, a 40% decrease). For the 46 diseases in this study, the variable with the greatest association with NIH funding in 2019 was the level of NIH funding in 2008, with a simple correlation of 0.88. Burden of disease and changes in burden of disease were not statistically significantly associated with NIH funding levels once the prior level of funding was included in the model. The models suggested that a 1% higher level of NIH funding in 2008 was associated with a 0.91% higher level of NIH funding in 2019. Conclusions and Relevance: In this study, NIH spending for most diseases seemed to be based primarily on the level of NIH spending more than 10 years earlier, despite changes in burden of disease. Congress and the NIH should examine the allocation process to ensure NIH investments are responsive to changes in the health of the population.

Association between US Pharmacopeia (USP) monograph standards, generic entry and prescription drug costs.

Despite the importance of pharmacopeial standards, little is known regarding their effect on drug competition. Such information is of particular relevance given the rising costs of prescription drugs and the focus of policy-makers and other stakeholders on addressing these costs. We examined 982 prescription drugs approved by U.S Food and Drug Administration since 1982 to examine the association between U.S. Pharmacopeia (USP) standards, generic entry and prescription costs. The presence of a USP drug product monograph was not associated with the time to the third generic entrant or with the likelihood of having a generic competitor. However, on average, drugs with USP drug product monographs had approximately fifty percent more generic manufacturers in the U.S. than their counterparts after accounting for factors such as market volume, age, route of administration and vintage. This greater competition was associated with an approximate savings of $6.22 billion in 2016, suggesting that USP drug product monographs may play an important role in promoting pharmaceutical competition and reducing prescription drug costs.

Coverage of Nonpharmacologic Treatments for Low Back Pain Among US Public and Private Insurers.

Importance: Despite epidemic rates of addiction and death from prescription opioids in the United States, suggesting the importance of providing alternatives to opioids in the treatment of pain, little is known regarding how payers' coverage policies may facilitate or impede access to such treatments. Objective: To examine coverage policies for 5 nonpharmacologic approaches commonly used to treat acute or chronic low back pain among commercial and Medicare Advantage insurance plans, plus an additional 6 treatments among Medicaid plans. Design, Setting, and Participants: Cross-sectional study of 15 commercial, 15 Medicaid, and 15 Medicare Advantage health plans for the 2017 calendar year in 16 states representing more than half of the US population. Interviews were conducted with 43 senior medical and pharmacy health plan executives from representative plans. Main Outcomes and Measures: Medical necessity and coverage status for the treatments examined, as well as the use of utilization management tools and cost-sharing magnitude and structure. Results: Commercial and Medicare insurers consistently regarded physical and occupational therapy as medically necessary, but policies varied for other therapies examined. Payers most commonly covered physical therapy (98% [44 of 45 plans]), occupational therapy (96% [43 of 45 plans]), and chiropractic care (89% [40 of 45 plans]), while transcutaneous electrical nerve stimulation (67% [10 of 15 plans]) and steroid injections (60% [9 of 15 plans]) were the most commonly covered among the therapies examined for Medicaid plans only. Despite evidence in the literature to support use of acupuncture and psychological interventions, these therapies were either not covered by plans examined (67% of all plans [30 of 45] did not cover acupuncture) or lacked information about coverage (80% of Medicaid plans [12 of 15] lacked information about coverage of psychological interventions). Utilization management tools, such as prior authorization, were common, but criteria varied greatly with respect to which conditions and what quantity and duration of services were covered. Interviewees represented 6 Medicaid managed care organizations, 2 Medicare Advantage or Part D plans, 9 commercial plans, and 3 trade organizations (eg, Blue Cross Blue Shield Association). Interviews with plan executives indicated a low level of integration between the coverage decision-making processes for pharmacologic and nonpharmacologic therapies for chronic pain. Conclusions and Relevance: Wide variation in coverage of nonpharmacologic treatments for low back pain may be driven by the absence of best practices, the administrative complexities of developing and revising coverage policies, and payers' economic incentives. Such variation suggests an important opportunity to improve the accessibility of services, reduce opioid use, and ultimately improve the quality of care for individuals with chronic, noncancer pain while alleviating the burden of opioid addiction and overdose.

Prescription Drug Coverage for Treatment of Low Back Pain Among US Medicaid, Medicare Advantage, and Commercial Insurers.

Importance: Despite unprecedented injuries and deaths from prescription opioids, little is known regarding medication coverage policies for the treatment of chronic noncancer pain among US insurers. Objective: To assess medication coverage policies for 62 products used to treat low back pain. Design, Setting, and Participants: A cross-sectional study of health plan documents from 15 Medicaid, 15 Medicare Advantage, and 20 commercial health plans in 2017 from 16 US states representing more than half the US population and 20 interviews with more than 43 senior medical and pharmacy health plan executives from representative plans. Data analysis was conducted from April 2017 to January 2018. Main Outcomes and Measures: Formulary coverage, utilization management, and patient out-of-pocket costs. Results: Of the 62 products examined, 30 were prescription opioids and 32 were nonopioid analgesics, including 10 nonsteroidal anti-inflammatory drugs, 10 antidepressants, 6 muscle relaxants, 4 anticonvulsants, and 2 topical analgesics. Medicaid plans covered a median of 19 opioids examined (interquartile range [IQR], 12-27; median, 63%; IQR, 40%-90%) and a median of 22 nonopioids examined (IQR, 21-27; median, 69%; IQR, 66%-83%). Medicare Advantage plans covered similar proportions (median [IQR], opioids: 17 [15-22]; 57% [50%-73%]; nonopioids: 22 [22-26]; 69% [69%-81%]), while commercial plans covered more opioids (median [IQR], 23 [21-25]; 77% [70%-84%]) and nonopioids (median [IQR], 26 [24-27]; 81% [74%-85%]). Utilization management strategies were common for opioids in Medicaid plans (median [IQR], 15 [11-20] opioids; 91% [74%-97%]), Medicare Advantage plans (median [IQR], 15 [9-18] opioids; 100% [100%-100%]), and commercial plans (median [IQR], 16 [11-20] opioids; 74% [53%-94%]), generally relying on 30-day quantity limits rather than prior authorization. Step therapy was especially uncommon. Many of the nonopioids examined also were subject to utilization management, especially quantity limits (24%-32% of products across payers) and prior authorization (median [IQR], commercial plans: 2 [0-3] nonopioids; 9% [0%-11%]; Medicare Advantage plans: 4 [3-5] nonopioids; 19% [10%-23%]; Medicaid plans: 6 [1-13] nonopioids; 38% [2%-52%]). Among commercial plans, the median plan placed 18 opioids (74%) and 20 nonopioids (81%) in tier 1, which was associated with a median out-of-pocket cost of $10 (IQR, $9-$10) per 30-day supply. Key informant interviews revealed an emphasis on increasing opioid utilization management and identifying high-risk prescribers and patients, rather than promoting comprehensive strategies to improve treatment of chronic pain or better integrating pharmacologic and nonpharmacologic alternatives to opioids. Conclusions and Relevance: Given the effect of coverage policies on drug utilization and health outcomes, these findings provide an important opportunity to evaluate how formulary placement, utilization management, copayments, and integration of nonpharmacologic treatments can be optimized to improve pain care while reducing opioid-related injuries and deaths.