Prescription Drug Spending in Fee-for-Service Medicare, 2008-2019

Abstract

ImportancePrescription drug spending is a topic of increased interest to the public and policymakers. However, prior assessments have been limited by focusing on retail spending (Part D–covered drugs), omitting clinician-administered (Part B–covered) drug spending, or focusing on all fee-for-service Medicare beneficiaries, regardless of their enrollment into prescription drug coverage.ObjectiveTo estimate the proportion of health care spending contributed by prescription drugs and to assess spending for retail and clinician-administered prescriptions.Design, Setting, and ParticipantsDescriptive, serial, cross-sectional analysis of a 20% random sample of fee-for-service Medicare beneficiaries in the United States from 2008 to 2019 who were continuously enrolled in Parts A (hospital), B (medical), and D (prescription drug) benefits, and not in Medicare Advantage.ExposureCalendar year.Main Outcomes and MeasuresNet spending on retail (Part D–covered) and clinician-administered (Part B–covered) prescription drugs; prescription drug spending (spending on Part B–covered and Part D–covered drugs) as a percentage of total per-capita health care spending. Measures were adjusted for inflation and for postsale rebates (for Part D–covered drugs).ResultsThere were 3 201 284 beneficiaries enrolled in Parts A, B, and D in 2008 and 4 502 718 in 2019. In 2019, beneficiaries had a mean (SD) age of 71.7 (12.0) years, documented sex was female for 57.7%, and 69.5% had no low-income subsidies. Total per-capita spending was $16 345 in 2008 and $20 117 in 2019. Comparing 2008 with 2019, per-capita Part A spending was $7106 (95% CI, $7084-$7128) vs $7120 (95% CI, $7098-$7141), Part B drug spending was $720 (95% CI, $713-$728) vs $1641 (95% CI, $1629-$1653), Part B nondrug spending was $5113 (95% CI, $5105-$5122) vs $6702 (95% CI, $6692-$6712), and Part D net spending was $3122 (95% CI, $3117-$3127) vs $3477 (95% CI, $3466-$3489). The proportion of total annual spending attributed to prescription drugs increased from 24.0% in 2008 to 27.2% in 2019, net of estimated rebates and discounts.Conclusions and RelevanceIn 2019, spending on prescription drugs represented approximately 27% of total spending among fee-for-service Medicare beneficiaries enrolled in Part D, even after accounting for postsale rebates.

Simulated Medicare Drug Price Negotiation Under the Inflation Reduction Act of 2022

“…3 Medicare is the single largest purchaser of prescription drugs in the US, 4 and those drugs account for more than 1 in 4 health care dollars spent by Medicare. 5 However, prior to passage of the IRA, Medicare was prohibited from negotiating prices. 6 The private companies that operate Medicare Part D plans and their pharmacy-benefit managers have historically negotiated rebates and other discounts, typically in exchange for favorable formulary placement or for waiving utilization management tools (eg, prior authorization).…”

“…e Selected from the top-selling drugs in Medicare Part B. All other drugs were top-selling drugs in Medicare Part D.including 5 insulins), neurologic or psychiatric(5), pulmonary(5), rheumatologic or immunologic (4), and cardiovascular (4) drugs. Drugs were selected a median of 12 years (IQR, 10-14 years) after FDA approval; the median time from approval to selection was 15 years (IQR, 12-16 years) for biologics and 12 years (IQR, 9-13 years) for small-molecule drugs.Three of the 40 selected drugs faced generic competition within the subsequent 2 years after selection: ranolazine, rosuvastatin, and sevelamer.…”

Pharmaceutical Spending in Fee-for-Service Medicare

“…The findings reported by Dusetzina et al have important implications, 3 of which deserve further discussion when considering the Inflation Reduction Act and future evaluations of its potential influence. First, the study was limited to Medicare fee-for service beneficiaries, for whom the Centers for Medicare & Medicaid Services data contain complete medical and pharmaceutical claims.…”

“…In this issue of JAMA , Dusetzina et al provide additional data to understand the changing role of prescription drugs in Medicare spending. The new report includes serial cross-sectional analyses of a 20% random sample of fee-for-service Medicare beneficiaries over 12 years, from 2008 to 2019.…”

“…The analysis by Dusetzina and colleagues provides key baseline metrics for future evaluations of the effects of the Inflation Reduction Act on prescription drug use and spending in Medicare. Understanding the magnitude of these effects, and the inevitable unintended consequences, will set the stage for whatever comes next on the continued journey to ensure medication affordability in the US.…”