Updated Medicare and Medicaid Drug Spending Dashboard
By Andy Slavitt, Acting CMS Administrator, Niall Brennan, CMS Chief Data Officer, Tim Gronniger, CMS Deputy Chief of Staff
The increased costs of prescription drugs are one of the most critical items for American families. The development of high-value prescription drugs has improved the health and wellbeing of millions of Medicare and Medicaid beneficiaries. The continued investment in innovation is critical to unlock the treatments for many diseases such as cancer and Alzheimer’s, and help us better manage our chronic conditions like diabetes, heart disease and depression, providing significant benefits to patients across the country.
However, in order to have the maximum impact on these innovations, medications must also be affordable and accessible. In the last several months, we have heard about rapidly increasing prices for Epi-Pen, the rising lockstep cost of insulin medications, and the practice of some companies hiking prices by combining two cheaper products into one, higher-priced drug.
In order to provide a better sense of the frequency and pervasiveness of these increases, last year CMS published a new interactive tool that tracks the price of drugs purchased for Medicare beneficiaries. This tool allows the public to view drugs in Medicare Part B and D with high spending on a per user basis, high spending for the program overall, and those with high unit cost increases in recent years. Individual entries contain helpful graphs on trends for specific drugs over the last five years, as we see below for a drug that helps to control high blood sugar.
This year, we are not only updating that tool with more current information, but are adding two important new pieces of information. First, we are adding information on drugs purchased for Medicaid beneficiaries, which totals another $57 billion in spending in 2015. Second, in an effort to provide more precise information, this year we are adding some high level information on rebates provided by drug manufacturers to offset some of the high drug costs in Medicare.
Overall, there is significant growth in spending on prescription drugs, representing a significant burden. In 2015, total prescription drug costs were estimated to have been $457 billion, or 16.7 percent of personal health care spending. This is up from $367 billion, or 15.4 percent of personal health care spending in 2012. With annual growth expected to average 6.7 percent annually through 2025, we can expect increasing costs to continue to put pressure on families and programs that cover prescription drugs.
Because Medicare and Medicaid beneficiaries often live on low- and fixed-incomes, the high and rising cost of certain drugs takes a significant toll on them. And prescription drug costs don’t only hit American seniors, people with disabilities, and low-income families; they also have a significant impact on taxpayers.
- Total costs for Medicare Part D above the catastrophic limit increased by 85 percent to a total of $51 billion from 2013 to 2015, before accounting for rebates. Medicare pays 80 percent of the costs above the catastrophic limit.
- An estimated 25 percent of the increase in Medicaid spending on prescription drugs between 2013 and 2014 was due to increased utilization, while 75 percent was due to increases in price.
The updated online dashboard tool presents information for three categories of Medicaid prescription drugs: drugs with high spending for the program overall, those with high spending on a per-prescription fill basis, and those with high unit cost increases in recent years. The dashboard provides trend analyses as well as additional detailed information on each drug, such as drug spending, number of prescription fills, brand and generic name, uses, and the name of the manufacturer.
For Medicare, this dashboard presents 80 drugs using 2015 data that met the criteria described below: 40 drugs provided through the Medicare Prescription Drug Program under Part D and 40 drugs administered by physicians and other professionals in the Medicare fee-for-service program under Part B. Products have been selected from each respective program based on three criteria: the top 15 drugs in total program spending; 15 drugs with both very high per-user spending and significant program spending; and 10 drugs with very high unit cost increases. For all drugs included on the list, the dashboard displays relevant spending, utilization, and trend data and also includes consumer-friendly information on the drug product descriptions, manufacturer(s), and clinical indications.
For both Medicare and Medicaid, the dashboard also provides information on the availability of Evidence-based Practice Center (EPC) reports from the Agency for Healthcare Research and Quality when available for a drug.
We encourage you to explore this information, which adds to the growing amount of data available. There are a number of highlights and some examples below.
Key Findings – Medicaid
- Highest total spending on a single drug changed in 2015 with Harvoni, the brand name Hepatitis C virus treatment, overtaking Abilify (a brand name treatment for schizophrenia, depression, and other illnesses ), which was the drug with the highest total spending in Medicaid from 2011 to 2014.
Trends in Medicaid Total Spending for the Top 5 Drugs
- Joint impact to Medicare and Medicaid. The top two Medicare Part D drugs — Harvoni, the highly-effective brand name Hepatitis C therapy; and the diabetes management treatment and insulin pen, Lantus –also made it into the top five Medicaid drugs in terms of total spending. Each were associated with more than $1 billion in Medicaid spending.
- Impact of unit increases. Ativan, a brand name drug to treat anxiety, had an average unit cost increase of 1,264 percent between 2014 and 2015. There were five other drugs that had unit cost increases of more than 300 percent. In total, Medicaid spending on these 20 drugs with unit cost increases more than doubled from $146 million in 2014 to $486 million in 2015.
- Among Medicaid drugs with the highest cost per prescription fill, Advate, the brand name hemophilia treatment that prevents deadly bleeding episodes in adults and children, had an average cost per fill of $20,828 and was associated with total program spending of $354 million.
- Dashboard drug lists may not include drugs covered in the news today. EpiPen, for example, does not appear in the top 20 Medicaid drug price increases or spending because because its large price increases occurred prior to this year. However, CMS data shows that Medicare and Medicaid spending on EpiPens rose by more than 500 percent from 2011 to 2015.
Of the 20 drugs with the highest per-unit cost increases in Medicaid, nine were generic drugs. Those products had increases in price ranging from 140 percent to nearly 500 percent between 2014 and 2015.
Key Findings – Medicare
- The five Medicare Part D drugs with highest total drug spending each accounted for more than $2 billion in gross spending in Part D in 2015. The five drugs with the highest total Medicare Part B spending in 2015 are the same as 2014 and combined they totaled more than $7 billion in spending.
Trends in Medicare Part D Total Spending for the Top 5 Drugs
- Among the Part D drugs with the highest unit cost, the chemotherapy agent that treats leukemia and other cancers, Gleevec, had a per user cost of $81,152 and was associated with total program spending of $1.2 billion.
- The brand name drug Glumetza that manages high blood sugar had an average unit cost increase of 381 percent in Part D between 2014 and 2015. There were three other drugs that had increases of more than 200 percent.
- Among Part B drugs, the brand name treatment for multiple sclerosis and Crohn’s disease Tysabri had a per user cost of $39,767 and total program spending of $288.8 million.
- The generic chemotherapy drug Mitomycin that treats stomach, pancreatic, and other cancers, had an average unit cost increase of 163 percent in Part B between 2014 and 2015, and there were six products that had unit cost increases of more than 20 percent.
Rebates in the Medicare Program
These data do not include rebate information that Medicare may receive from pharmaceutical manufacturers because federal law restricts the release of this information. But, for the first time, we are able to provide an aggregated summary of Medicare Part D manufacturer rebate information for calendar year 2014 for several broad categories of brand name drugs [https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Information-on-Prescription-Drugs/2014_PartD_Rebates.html].
In total, more than $16 billion in manufacturer rebates for brand name drugs were collected by Medicare Part D plans in 2014 for an average rebate of 17.5 percent. Among the Medicare Part D brand name drugs listed in the 2014 dashboard, the average manufacturer rebate was 17.8 percent. Twenty-two of these drugs accounted for a total of $6.6 billion in rebates. As reported by the HHS Office of Inspector General, it has been found that drug rebates in the Medicare Part D program are generally lower compared to other payors. Part of the reason for this is that Medicare cannot harness its full purchasing power to negotiate for rebates across all Part D plans. We believe releasing this information, even at this higher level, helps to shed new light on the relationship between drug pricing and overall program costs.
We know that millions of Americans have come to rely on these prescription drugs to manage their chronic conditions or to treat serious illnesses. Maintaining access to those medications is the reason we believe informed dialogue on how to manage costs and cost increases are so important.
As administrators for the Medicare and Medicaid program, our most important goal is to make sure that beneficiaries have access to high-value, innovative medicines that improve their lives. But because costs necessarily get passed on to beneficiaries and taxpayers through higher premiums, coinsurance, and taxes, we also have a responsibility to ensure that access to those medicines remains affordable. We hope by providing a better view into our spending on prescription drugs, this understanding can help policy makers, manufacturers, purchasers, and consumers to work together to better the health of all Americans.