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The Inflation Relief Act calls for the government to barter the cost of positive high-spending medicine lined by means of Medicare Section D, Medicare’s outpatient prescription drug get advantages program, and Medicare Section B, which covers doctor and outpatient products and services, together with medicine administered by means of physicians and different suppliers. Underneath the brand new Medicare Drug Price Negotiation Program, the collection of medicine topic to worth negotiation might be restricted to ten Section D medicine for 2026, every other 15 Section D medicine for 2027, every other 15 Section D and Section B medicine for 2028, and every other 20 Section D and Section B medicine for 2029 and later years. The collection of medicine with negotiated costs to be had will collect through the years.
The ten Section D medicine that might be decided on for value negotiation for 2026 might be printed by means of September 1, 2023. Those 10 medicine might be selected from the tip 50 negotiation-eligible Section D medicine with the very best overall Medicare Section D expenditures (outlined as overall gross covered prescription drug costs). Matter to express exclusions and exceptions, medicine qualify for value negotiation if they’re single-source brand-name medicine or biological products with out therapeutically-equivalent generic or biosimilar possible choices, and are no less than 7 years (for small-molecule medicine) or 11 years (for biologics) previous their FDA approval or licensure date, as of the date that the record of substances decided on for negotiation is printed.
This research supplies context for working out the possible affect of negotiating costs for a restricted collection of Medicare-covered medicine by means of figuring out the ten top-selling medicine in 2021, measuring the percentage of overall Medicare Section D drug spending accounted for by means of top-selling medicine that 12 months, and analyzing adjustments in spending and use of those medicine since 2018 (the primary 12 months that each one 10 of the medication have been lined below Section D). We focal point on medicine lined below Section D, reasonably than Section B, since negotiation might be restricted to Section D medicine for the primary two years of the negotiation program. We ranked medicine by means of overall gross spending in 2021 since that’s the measure that might be used to rank drug merchandise within the negotiation program. Our research is according to Facilities for Medicare & Medicaid Products and services’ data on Medicare Part D spending by drug.
You will need to observe that this research isn’t designed to spot which medicine usually are topic to worth negotiation for 2026, since we don’t consider all of the factors that resolve whether or not a drug is negotiation-eligible and we do not need get admission to to the more current spending data that CMS will use in deciding on medicine for value negotiation.
A small collection of medicine account for a disproportionate proportion of Medicare Section D prescription drug spending, with the ten top-selling medicine accounting for almost one-fourth of gross Section D spending in 2021
In 2021, Medicare Section D lined greater than 3,500 prescription drug merchandise, with overall gross spending of $216 billion, no longer accounting for rebates paid by means of drug producers to pharmacy get advantages managers (PBMs). The ten top-selling Section D medicine accounted for 0.3% of lined medicine and 22% of overall gross Medicare drug spending in 2021 (Determine 1). The highest 100 medicine, representing simply 3% of lined medicine, accounted for 61% of overall gross spending that 12 months.
General gross spending at the height 10 Medicare Section D medicine in 2021 ranged from $2.6 billion for Ozempic, a diabetes drug, to $12.6 billion for Eliquis, a blood thinner
Within the combination, gross Medicare drug spending at the height 10 Section D medicine in 2021 used to be $48 billion. Eliquis, a blood thinner manufactured by means of Bristol Myers Squibb, used to be the top-selling drug, accounting for 1 / 4 of this overall, or $12.6 billion (Determine 2). Gross Medicare Section D spending exceeded $5 billion for each Revlimid, a remedy for more than one myeloma additionally manufactured by means of Bristol Myers Squibb, and Xarelto, a blood thinner manufactured by means of Janssen.
5 of the ten top-selling Section D medicine in 2021 are diabetes medicine: Trulicity, Januvia, Jardiance, Lantus Solostar, and Ozempic. Particularly, Ozempic belongs to a category of medications that experience received consideration in contemporary months as a result of they’re extremely efficient weight reduction brokers. Manufactured by means of Novo Nordisk, Ozempic used to be authorized by means of the FDA in 2017 as a treatment for type 2 diabetes. Whilst Medicare does no longer quilt Ozempic when prescribed off-label for weight reduction because of the current law prohibition on Medicare protection of substances when used for weight reduction, it’s lined as a diabetes drug. Gross Section D spending on Ozempic, utilized by 0.5 million Section D enrollees in 2021, totaled $2.6 billion.
Additionally incorporated within the height 10 is Imbruvica, a most cancers remedy manufactured by means of Pharmacyclics, with gross Medicare spending of $3.2 billion in 2021, and Humira Citrate-free (Cf) pen, a remedy for rheumatoid arthritis (amongst different prerequisites), manufactured by means of Abbvie, with gross Medicare spending of $2.9 billion in 2021. (Whilst the unique model of Humira used to be authorized in 2002, Abbvie introduced the citrate-free model in 2018). Gross Medicare spending throughout all formulations of Humira totaled $4.7 billion in 2021, together with the citrate-free and unique variations and more than a few formulations and dosages of each and every model authorized for various indications and populations.
Within the combination, gross Medicare spending for the ten height promoting Section D medicine greater than doubled between 2018 and 2021
Between 2018 and 2021, combination gross spending at the 10 top-selling medicine in 2021 greater from $22 billion to just about $48 billion. The rise in gross spending on those 10 medicine on my own accounted for greater than part of the rise in gross Medicare spending throughout all lined Section D medicine over those years. Within the combination, gross Section D spending rose from $166 billion in 2018 to $216 billion in 2021.
Over those years, overall gross Section D spending on Eliquis, the tip promoting drug in Medicare Section D in 2021, greater by means of 2.5 occasions from $5 billion in 2018 to $12.6 billion in 2021; gross spending for the diabetes drug Trulicity greater than tripled from $1.4 billion to $4.7 billion; and gross spending at the diabetes drug Jardiance greater greater than 5 occasions from $0.7 billion to $3.7 billion (Determine 3). For all of those medicine, the proportion building up in gross spending between 2018 and 2021 outpaced the proportion building up within the collection of customers over those years (information no longer proven, see Determine 2 for collection of customers in line with drug in 2018 and 2021).
Conclusion
The Medicare drug value negotiation program established by means of the Inflation Relief Act is designed to focus on high-spending medicine which were in the marketplace for a number of years and shortage generic or biosimilar pageant. CBO estimates just about $100 billion in Medicare financial savings between 2026 and 2031 from the drug negotiation program. Our research presentations that Medicare Section D spending is extremely concentrated amongst a small proportion of lined brand-name medicine, and that will increase in gross spending at the 10 top-selling medicine have contributed to a considerable building up in total Medicare drug spending in recent times.
Whilst this research isn’t designed to spot which medicine might be decided on for negotiation for 2026, two of the ten top-selling Section D medicine in 2021 would no longer be eligible for variety according to after they have been authorized (Trulicity, a biologic authorized in 2014, and Ozempic, a small-molecule drug authorized in 2017) and 3 would no longer be eligible for variety according to generic or biosimilar availability in 2023 (Revlimid, Humira, and Lantus). The overall record might be decided according to extra present spending information than is publicly to be had and attention of a number of elements no longer incorporated right here. Whilst all the 10 top-selling Section D medicine in 2021 is probably not incorporated at the record of 10 medicine decided on for value negotiation this 12 months, this research means that concentrated on negotiation on a small collection of high-spending medicine may impact a disproportionate proportion of Medicare drug spending sooner or later.
This paintings used to be supported partially by means of Arnold Ventures. KFF maintains complete editorial keep an eye on over all of its coverage research, polling, and journalism actions.
| This research is according to 2021 Medicare Part D Spending by Drug data from the Facilities for Medicare & Medicaid Products and services (CMS). The knowledge contains spending for beneficiaries in each conventional Medicare and Medicare Merit who’re enrolled in Medicare Section D plans.
Drug spending metrics for Section D medicine introduced within the CMS information are according to the gross drug value, which represents overall spending for the prescription declare, together with Medicare, plan, and beneficiary bills. The Section D spending metrics don’t replicate producer rebates or different value concessions, as a result of CMS is illegal from publicly disclosing such knowledge. We taken care of the record of substances within the Section D dashboard in 2021 (n=3,566) by means of overall spending and calculated the % of overall spending accounted for by means of each and every drug, summing around the height 10, 15, 20, 50, and 100 medicine ranked by means of overall spending. We used the FDA’s Drugs@FDA database to spot FDA approval dates for the tip 10 medicine by means of Section D gross spending in 2021. |
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