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

Abstract

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.

Figure.. Net and Out-of-Pocket Spending on Brand-Name Specialty Drugs Among Medicare Part D Enrollees Who Used Such Drugs in 2010, 2015, and 2019

Spending amounts are adjusted for inflation using the Personal Consumption Expenditures Price Index as reported by the Bureau of Economic Analysis. Cost-sharing assistance is defined as cost-sharing subsidies provided through the low-income subsidy program or enrollment in an employer retiree plan.