Sending The Wrong Price Signal: Why Do Some Brand-Name Drugs Cost Medicare Beneficiaries Less Than Generics?

The high costs of anticancer therapies in the USA: challenges, opportunities and progress

The USA spent $99 billion on orally administered and clinician-administered anticancer therapies (excluding supportive care) in 2023 and spending is projected to increase to $180 billion by 2028. This increased spending on anticancer therapies largely reflects the high launch prices of novel therapeutics and increases in the prices of existing products, even in the absence of new evidence of clinical benefit or changes in use. Consequently, high prices have impeded Americans' access to and affordability of necessary anticancer therapies and thus increased their risk of cost-related non-adherence, cancer recurrence and mortality. To address the rising prices and concerns regarding Americans' spending on anticancer therapies, state and federal governments have, over the past decade, enacted legislation that caps out-of-pocket spending, expands subsidies and requires drug price negotiations. In this Perspective, we summarize US policies aimed to lower the costs of anticancer therapies, discuss the implications of such reforms and propose additional solutions needed to reduce costs and increase value.

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.

Cost-Health Literacy as an Educational Objective in Fellowship Training

Physicians are encouraged to communicate with their patients about financial concerns, but are infrequently taught skills necessary to do so. This study describes a curriculum for oncology fellows aimed to improve skills of cost-health literacy, and provides assessment of the curriculum impact on self-perceived cost communication practices. Oncology fellows at a large academic program in 2019 participated in a cost-health literacy curriculum over 3 months. The curriculum consisted of a didactic on financial toxicity (45 min), a problem-based learning case highlighting financial toxicity risk factors and areas for intervention (30 min), and a group discussion (30 min) to review and consolidate strategies to navigate financial toxicity in direct patient care. A cost-health literacy survey was administered at baseline and at the conclusion of the curriculum to evaluate the impact of the program. Of 19 participants, 16 completed both the pre-survey and post-survey and were included in the analysis. After the intervention, participants were more likely to report comfort discussing out-of-pocket costs (50% vs. 19%, p = 0.002) and to feel they could help a patient experiencing financial toxicity (62% vs. 6%, p = 0.005). There was no improvement in the subjective assessment of patient financial distress (57% v 50%, p = 0.759). Oncology fellows can improve self-reported cost-health literacy skills through participation in a targeted, brief curriculum. Further studies are warranted to determine how this approach can be applied in other settings and if it objectively impacts cost communication practices.

Evaluation of Medicare Coverage and Estimated Out-of-Pocket Costs for Generic Abiraterone Products

This cross-sectional study evaluates the association of generic competition and changes in product coverage and cost-sharing by using Medicare data and estimated out-of-pocket costs for the oral specialty drug abiraterone.

Improving Global Healthcare and Reducing Costs Using Second-Generation Artificial Intelligence-Based Digital Pills: A Market Disruptor

Background and Aims: Improving global health requires making current and future drugs more effective and affordable. While healthcare systems around the world are faced with increasing costs, branded and generic drug companies are facing the challenge of creating market differentiators. Two of the problems associated with the partial or complete loss of response to chronic medications are a lack of adherence and compensatory responses to chronic drug administration, which leads to tolerance and loss of effectiveness. Approach and Results: First-generation artificial intelligence (AI) systems do not address these needs and suffer from a low adoption rate by patients and clinicians. Second-generation AI systems are focused on a single subject and on improving patients' clinical outcomes. The digital pill, which combines a personalized second-generation AI system with a branded or generic drug, improves the patient response to drugs by increasing adherence and overcoming the loss of response to chronic medications. By improving the effectiveness of drugs, the digital pill reduces healthcare costs and increases end-user adoption. The digital pill also provides a market differentiator for branded and generic drug companies. Conclusions: Implementing the use of a digital pill is expected to reduce healthcare costs, providing advantages for all the players in the healthcare system including patients, clinicians, healthcare authorities, insurance companies, and drug manufacturers. The described business model for the digital pill is based on distributing the savings across all stakeholders, thereby enabling improved global health.

A proposed taxonomy for population-level prescription use patterns

Recent and increasing discussion of prescription price transparency highlights the importance of defining, measuring and communicating prescription drug value. To help advance these goals, the authors propose a taxonomy of population-level prescription drug use patterns. The taxonomy assigns prescription use to one of five categories according to likely population-level health impact. The categories include effective, potentially discretionary, potentially harmful, wasteful, and lifestyle. The authors hope the proposed taxonomy will inform discussion of prescription drug value by providing estimates of population impact, especially the balance of anticipated benefit and harm.

Shortages and price variability of essential cytotoxic medicines for treating children with cancers

Introduction

Low-income and middle-income countries (LMICs) face the largest burden of mortality from childhood cancers with limited access to curative therapies. Few comparative analyses across all income groups and world regions have examined the availability and acquisition costs of essential medicines for treating cancers in children.

Methods

A cross-sectional survey involved countries in five income groups—low-income (LIC), lower-middle-income (LMC), upper-middle-income (UMC), two high-income country groups (HIC1, HIC2). Physicians and pharmacists reported institutional use, availability, stock outs and prices (brand and generic products) of 34 essential medicines. Price comparisons used US$, applying foreign exchange rates (XR) and purchasing power parity (PPP) adjustments. Medicine costs for treating acute lymphoblastic leukaemia (ALL), Burkitt lymphoma (BL) and Wilms tumour (WT) were calculated (child 29 kg, body surface area 1 m²). Comparisons were conducted using non-parametric Kruskal-Wallis tests.

Results

Fifty-eight respondents (50 countries) provided information on medicine use, availability and stock outs, with usable price data from 42 facilities (37 countries). The extent of use of International Society of Paediatric Oncology core and ancillary medicines varied across income groups (p<0.0001 and p=0.0002 respectively). LMC and LIC facilities used fewer medicines than UMC and HIC facilities. UMC and LMC facilities were more likely to report medicines not available or stockouts.

Medicine prices varied widely within and between income bands; generic products were not always cheaper than brand equivalents. PPP adjustment showed relatively higher prices in UMC and LMC facilities for some medicines. Medicine costs were highest in HICs for ALL (p=0.0075 XR; p=0.0178 PPP-adjusted analyses) and WT (p =<0.0001 XR; p=0.0007 PPP-adjusted). Medicine costs for BL were not significantly different.

Conclusion

Problems with the availability of essential medicines, dependable supply chains, confidential medicine prices and wide variability in treatment costs contribute to persistent challenges in the care of children with treatable cancers, especially in LMICs.

Variation in generic dispensing rates in Medicare Part D

OBJECTIVES

The use of generics in Medicare Part D generates cost savings for plan sponsors, beneficiaries, and the federal government. However, there is considerable variation in generic use across plans, even within a therapeutic class. Our objective is to understand the extent of variation in generic use in Part D and to understand factors associated with generic use.

STUDY DESIGN

We used an observational study design using Medicare Part D claims from 2006 to 2016.

METHODS

We used descriptive statistics and regression analysis to examine the variation in generic and brand use across plans and the extent to which patient, plan, and area characteristics are associated with the choice of medication within a therapeutic class.

RESULTS

Although generic use has increased markedly over time in Part D, substantial variation across plans persists in a number of common therapeutic classes. Beneficiary characteristics such as gender and health status are associated with higher/lower generic use, as are plan characteristics such as plan type (stand-alone prescription drug plan or Medicare Advantage), premium, and parent company.

CONCLUSIONS

Because we cannot study the impact of brand-name drug rebates on generic use, we can study the variation in generic use across Part D plans as an indirect way to assess pharmacy benefit manager and plan incentives. We find circumstantial evidence that, in certain classes, rebates may play a role in influencing brand over generic use, although the exact relationship is unknowable given the proprietary nature of rebates.

Medicare Part D Spending on Drugs Prescribed by Oncologists: Temporal Trends and Regional Variation

PURPOSE

Drug cost is a significant factor in the ever-increasing expenditures for cancer health care.

METHODS

We used Medicare Part D administrative data to explore prescribing patterns and attributed drug costs of oncologists from 2013 to 2017. We highlighted regional variation in spending and potential associations. We used the location quotient (LQ) to measure the relative concentration of oncologists compared with the national average by hospital referral regions. Costs were reported in 2017 US dollars (inflation adjusted) for cross-year comparisons.

RESULTS

Oncology's share in Part D spending showed an uninterrupted increasing trend. In 2017, oncologists prescribed medicines with $12.8 billion in Part D costs (8.3% of all Part D payments), which exceeded 2013 costs by $7.3 billion, when their claim payments were $5.5 billion (5.0% of all Part D payments). Oncology contributed a higher annual growth in Part D drug costs compared with all other providers (15.1% and 3.1%, respectively, for 2017). The top 3 drugs increased cost by approximately $3.5 billion from 2013 to 2017. Across hospital referral regions, the oncologists' Part D share varied (median in 2017, 7.7%; interquartile range, 6.2%-9.3%) and was higher across regions where oncologists had an LQ significantly > 1 (mostly in areas with centers that excel in cancer care) and lower for an LQ significantly < 1 (median, 9.7% v 6.2%, respectively; P < .001).

CONCLUSION

Oncology increased its share in Part D drug spending, disproportionately to all other providers, with regional differences partially moderated by the oncology workforce and quality of cancer care.

Medicare Part D Plans Rarely Cover Brand-Name Drugs When Generics Are Available

Recent press reports and other evidence suggest that Medicare Part D plans may be encouraging the use of brand-name drugs instead of generics. However, the scope of such practices is unclear. We examined Medicare Part D formulary coverage and tier placement of matched pairs of brand-name drugs and generics to quantify how often preferred formulary placement of brand-name drugs is occurring within and across Part D plans and to assess the cost implications for Medicare and its beneficiaries. We found that in 2019, 84 percent of 4,176,772 Part D plan-product combinations had generic-only coverage (that is, the brand-name counterparts were not covered). Another 15 percent covered both the brand-name and generic versions of a product. For the small number of products whose brand-name versions were covered preferentially to their generic equivalents, beneficiary and Medicare prices were generally low for both products. Overall, we found that most Part D plan formularies are designed to encourage the use of generics rather than their brand-name counterparts. Policy makers should continue to monitor Part D formulary coverage patterns to ensure consistent and generous coverage for generic drugs, given their important role in reducing prescription drug spending.

Ophthalmic Medication Expenditures and Out-of-Pocket Spending: An Analysis of United States Prescriptions from 2007 through 2016

PURPOSE

To estimate temporal trends in total and out-of-pocket (OOP) expenditures for ophthalmic prescription medications among adults in the United States.

DESIGN

Retrospective, longitudinal cohort study.

PARTICIPANTS

Participants in the 2007 through 2016 Medical Expenditure Panel Survey (MEPS) 18 years of age or older. The MEPS is a nationally representative survey of the noninstitutionalized, civilian United States population.

METHODS

We estimated trends in national and per capita annual ophthalmic prescription expenditures by pooling data into 2-year cycles and using weighted linear regressions. We also identified characteristics associated with greater total or OOP expenditures with multivariate weighted linear regression. Costs were adjusted to 2016 United States dollars using the gross domestic product price index.

MAIN OUTCOME MEASURES

Trends in total and OOP annual expenditures for ophthalmic medications from 2007 through 2016 as well as factors associated with greater expenditures.

RESULTS

From 2007 through 2016, 9989 MEPS participants (4.2%) reported ophthalmic medication prescription use. Annual ophthalmic medication use increased from 10.0 to 12.2 million individuals from 2007 and 2008 through 2015 and 2016. In this same period, national expenditures for ophthalmic medications increased from $3.39 billion to $6.08 billion and OOP expenditures decreased from $1.34 to $1.18 billion. Per capita expenditure increased from $338.72 to $499.42 (P < 0.001), and per capita OOP expenditure decreased from $133.48 to $96.67 (P < 0.001) from 2007 and 2008 through 2015 and 2016, respectively. From 2015 through 2016, dry eye (29.5%) and glaucoma (42.7%) medications accounted for 72.2% of all ophthalmic medication expenditures. Patients who were older than 65 years (P < 0.001), uninsured (P < 0.001), and visually impaired (P < 0.001) were significantly more likely to have greater OOP spending on ophthalmic medications.

CONCLUSIONS

Total ophthalmic medication expenditure in the United States increased significantly over the last decade, whereas OOP expenses decreased. Increases in coverage, copayment assistance, and use of expensive brand drugs may be contributing to these trends. Policy makers and physicians should be aware that rising overall drug expenditures ultimately may increase indirect costs to the patient and offset a decline in OOP prescription drug spending.