Role of Specialty Drugs in Rising Drug Prices for Medicare Part D.

Importance: Prices for brand-name drugs affect both federal spending and out-of-pocket liability for Medicare Part D enrollees. Objective: To examine how prices for brand-name drugs, net of rebates and discounts, have changed from 2010 to 2019 and to examine the role of specialty drugs in those changes. Design, Setting, and Participants: This study involved a descriptive analysis of prescription drug spending and prices between 2010 and 2019. The universe of prescription drug event data from those years were combined with confidential data from the Centers for Medicare & Medicaid Services on rebates and discounts that manufacturers and pharmacies pay to Medicare Part D plans to calculate rebate percentages, net spending, and net prices at the drug level. Specialty drugs were identified using information from IQVIA, allowing for a stratified analysis by specialty status. Data were analyzed from March 2019 to March 2024. Main Outcomes and Measures: Average prices (net of rebates and discounts in 2019 US dollars) and average annual price growth for brand-name prescription drugs, overall and separately for specialty and nonspecialty drugs. Results: Average net prices for brand-name drugs doubled from 2010 to 2019 (from $167 to $370). Growth in specialty drug prices was an underlying factor in those increases: average annual price growth was 13.2% for specialty drugs compared with 2.6% for nonspecialty drugs. Price growth for specialty drugs over the decade was smaller than what the Congressional Budget Office reported for the 2010 to 2015 period (increase of 22.3% per year vs 4.5% per year for nonspecialty drug prices), suggesting that price growth slowed after 2015. Drugs that treat hepatitis C contributed to that difference because prices for those drugs were initially high and then subsequently fell. Absent those drugs, price growth for specialty drugs averaged 18.1% in the first half of the decade and 6.9% in the second half. Conclusions and Relevance: Results of this study show that prices for specialty drugs have continued to increase over time in the Medicare Part D program, which contributes to high out-of-pocket liability for users of those drugs in addition to US federal budgetary expenditures.

Spending on and Use of Clinician-Administered Drugs in Medicare.

Importance: Medicare Part B drug expenditures have increased in recent years. This trend is likely to persist given the increased use and availability of biologics. Objectives: To assess the extent to which Medicare Part B spending growth was associated with changes in price vs quantity, and how these trends interacted with entry of new drugs into the marketplace. Design, Setting, and Participants: This cross-sectional study quantified the degree of spending concentration and the association between price and use of Part B drugs among fee-for-service Medicare beneficiaries. Data on use and spending for separately payable Part B drugs were included. Source data were aggregated to the drug-year level and reported from 2016 to 2020. Descriptive decomposition and index analyses quantified the relative association of price and use changes separately for existing single-source drugs, existing drugs that faced competition, and new drugs that entered the market. Data analysis was performed from June to December 2022. Main Outcomes and Measures: Part B drug spending by the fee-for-service Medicare program and beneficiaries, as well as use, defined as dosage units and beneficiaries using the drugs. Results: The study included 535 unique Part B drug products. From 2016 to 2020, 15 or fewer products comprised half of all Part B drug expenditures. The set of 7 drugs that comprised the top 25% of spending was very consistent over time, and all were biologics. Part B drug products that cost $1.85 or less per administration accounted for more than half of the doses administered in 2020. Spending on Part B drugs increased by $15 billion from 2016 to 2020. The entry of new, nonbiosimilar drugs during this period accounted for $12 billion of this increased spending (80%), while shifts in use and price increases among existing single-source brand drugs accounted for the remaining increase in spending. Part B spending decreased among the subset of existing drugs facing generic or biosimilar competition. Among single-source drugs on the market in 2016, the index that varied dosage units exceeded the index that varied price in all years, confirming that changes in use were associated more with spending growth for those drugs. Conclusions and Relevance: In this cross-sectional study of Medicare Part B drug expenditures, spending was found to be concentrated among a small number of drugs. The entry of new products was a key factor associated with recent increases in Part B drug spending. These findings suggest that policies targeting top-selling drugs may have greater potential to curb Part B drug spending than those targeting price growth.

The impact of hospital mergers on treatment intensity and health outcomes.

OBJECTIVE: To analyze the impact of hospital mergers on treatment intensity and health outcomes. DATA: Hospital inpatient data from California for 1990 through 2006, encompassing 40 mergers. STUDY DESIGN: I used a geographic-based IV approach to determine the effect of a zip code's exposure to a merger. The merged facility's market share represents exposure, instrumented with combined premerge shares. Additional specifications include Herfindahl Index (HHI), instrumented with predicted change in HHI. RESULTS: The primary specification results indicate that merger completion is associated with a 3.7 percent increase in the utilization of bypass surgery and angioplasty and a 1.7 percent increase in inpatient mortality above averages in 2000 for the average zip code. Isolating the competition mechanism mutes the treatment intensity result slightly, but it more than doubles the merger exposure effect on inpatient mortality to a 3.9 percent increase. The competition mechanism is associated with a sizeable increase in number of procedures. CONCLUSIONS: Unlike previous studies, this analysis finds that hospital mergers are associated with increased treatment intensity and higher inpatient mortality rates among heart disease patients. Access to additional outcome measures such as 30-day mortality and readmission rates might shed additional light on whether the relationship between these outcomes is causal.