Spending on World Health Organization essential medicines in Medicare Part D, 2011-15: retrospective cost analysis

Abstract

Objectives: To characterize the trends, drivers, and potential modifiers of increased spending by US Medicare beneficiaries on medicines deemed essential by the World Health Organization.

Design: Retrospective cost analysis of Medicare Part D Prescriber Public Use File, detailing annual generic and brand name drug prescribing and spending from 2011 through 2015 by Medicare Part D participants who filled prescriptions for WHO essential medicines.

Setting: US Medicare System.

Main outcome measures: Total and per beneficiary Medicare spending, total and per beneficiary out-of-pocket patient spending, cumulative beneficiary count, claim count, and per unit drug cost. All spending measures were adjusted for inflation and reported in 2015 US dollars.

Results: Medicare Part D expenditures on 265 WHO essential medicines between 2011 and 2015 was $87.2bn (£68.4bn; €76.5bn), with annual spending increasing from $11.9bn in 2011 to $25.8bn in 2015 (116%). Patients' out-of-pocket spending for essential medicines over the same period was $12.1bn. Total annual out-of-pocket spending increased from $2.0bn to $2.9bn (47%), and annual per beneficiary out-of-pocket spending on these drugs increased from $20.42 to $21.17 (4%). Total prescription count increased from 376.1m to 498.9m (33%), and cumulative beneficiary count grew from 95.9m to 135.8m (42%). Of the essential medicines included in the study, the per unit cost of 133 (50%) agents increased faster than the average inflation rate during this period. Overall, approximately 58% of the increase in total spending during this period can be attributed to the introduction of novel agents.

Conclusions: Spending associated with essential medicines grew substantially from 2011 to 2015, driven largely by the increased use of two expensive novel drugs used in treating hepatitis C. Approximately 22% of increased total spending during this period can be attributed to increases in per unit cost of existing drugs. These trends may limit patients' access to essential drugs while also increasing healthcare system costs.

Fig 1

Inclusion and exclusion of World Health Organization essential medicines. 436 essential medications were initially screened with Medicare Part D Prescriber Public Use File, of which 246 drugs corresponding to 265 essential medicine formulations were included for analysis

Fig 2

Medicare Part D total and out-of-pocket spending on essential medicines, 2011 to 2015. Total and out-of-pocket spending depicted on left axis. Per beneficiary total spending and out-of-pocket spending shown on right axis (accompanying values listed in table 1). Introduction of sofosbuvir and ledipasvir-sofosbuvir accounts for sharp increase in per beneficiary total spending after 2013

Fig 3

Ratio of annual percentage change in per unit cost to annual inflation rate. Ranges represent ratio of annual percentage change in per unit cost to annual inflation rate. Numerical values represent number and percentage of formulations. Overall, 133/265 (50%) essential medicine formulations increased in per unit cost faster than average rate of inflation, with 9 (3%) and 11 (4%) formulations sustaining increases of greater than 100 times and between 50 and 100 times rate of inflation, respectively. Linezolid and daclatasvir are not included in this chart because these drugs had only 1 year of pricing data