Net
prescription drug spending increased significantly over a four-year period, but
rebates and discounts helped stabilize patient out-of-pocket spending.
By Jessica
Kent
March 15, 2019 - Net prescription
drug spending increased from $250.7 billion in 2012 to $341 billion in 2016,
according to a new report from the Pew Charitable
Trusts.
The report also found that over the same
period, the share of commercial insurance premiums devoted to retail
prescription drug coverage increased from 12.8 percent to 16.5 percent.
However, patient out-of-pocket spending remained relatively stable, partly
because of increased insurance coverage and manufacturer assistance.
Americans spend more on prescription drugs each
year than citizens in any other country, Pew stated. However, evaluating drug
spending is challenging, because there is limited public data on how much
payers and supply chain intermediaries pay for prescription medications.
“The complex drug supply and payment chain
involves transactions among drug manufacturers, wholesalers, pharmacies,
pharmacy benefit managers (PBMs), and health plans,” the report said.
“This analysis, using primary research and a
combination of third-party and government reports and data, quantifies the
share of overall spending on retail prescription drugs retained by health plans
and others in the supply and payment chain.”
Researchers set out to examine prescription
drugs reimbursed through pharmacy benefits and dispensed through retail,
specialty, mail-order, or long-term care pharmacies.
The group estimated total spending on retail
prescription drug coverage, as well as the amount retained by each stakeholder
after accounting for purchases and discounts.
Insurance coverage increased by 13.2 percent
over the 2012 to 2016 time period, the researchers noted, contributing to
higher overall spending on prescriptions.
While these developments led to increased patient spending on retail
drugs, the share of net spending attributed to patient payments decreased over
the four-year period.
“As access to prescription drug coverage
expanded, aggregate patient payments also increased for retail
pharmaceuticals,” the report said.
“From 2012 to 2016, patient payments,
including both cost-sharing and premium payments, grew from $86.6 billion to
$103.8 billion. As a share of net spending on retail prescription drug
coverage, however, patient payments declined during the same time frame from
34.5 percent of total spending to 30.4 percent.”
Meanwhile, patient responsibility for retail
prescription drug costs rose from $59.5 billion in 2012 to $65.8 billion in
2016. Yet many patients have been protected from this increase because of
the expanded use of copay coupon programs and the closing of the Medicare Part
D coverage gap.
“Together, copay coupons and Part D coverage
gap discounts represented more than 20 percent of patient responsibility for
retail prescription drug costs in 2016,” the report said.
“With the other factors noted above, these
contributed to a slight decline in actual patient cost-sharing payments from
2014 to 2016, following an increase in 2013.”
Among commercial health insurers, the total
value of commercial insurance premiums attributed to the pharmacy benefit
increased, as did the share of insurance premiums attributed to the retail
pharmacy benefit.
From 2012 to 2016, the rise in brand name drug
prices was offset by increased pharmaceutical manufacturer rebates.
“Rebates accounted for 15.8 percent of retail
pharmacy benefit premiums in commercial plans in 2016, up from 9.2 percent in
2012,” the report said.
“The continued growth in both list prices and
rebate volume has contributed to a larger spread between the list and net
prices of brand pharmaceuticals. Although manufacturer rebates do not
typically reduce patient out-of-pocket costs directly, survey respondents
reported that higher rebate volume helps limit growth in member premiums.”
Pew found that there were similar trends
in Medicare Part D plans.
“Growth in list prices for pharmaceutical
drugs has largely been offset by growth in manufacturer rebates to Medicare
Part D plans, which nearly tripled from 2012 to 2016,” the report said.
“This rebate growth has helped restrain total
Medicare Part D spending increases and limited Part D enrollee premium growth.
Lower premiums have also contributed to slow growth in overall Medicare Part D
spending per beneficiary from 2012 to 2016, which increased just 2 percent per
year on average.”
For Medicaid and other government payers,
coverage payments for retail prescription drugs were offset by statutory
rebates from pharmaceutical manufacturers. Among these payers, payments for
retail prescription drugs have increased, due in part to Medicaid expansion and
growth in per-beneficiary drug spending between 2014 and 2016.
Several factors countered spending growth in
Medicaid and other government payers, Pew noted. The Affordable Care Act
increased the base Medicaid rebate for brand and generic drugs, and required that rebates
be paid for drugs that are covered by Medicaid managed care plans.
“These actions, combined with the Medicaid
inflation penalty (which requires additional rebates when a drug’s Average
Manufacturer Price increases faster than the consumer price index), contributed
to a surge in the volume of Medicaid rebates for retail drugs from $13.3
billion in 2012 to $23.5 billion in 2016,” the report stated.
The results show that despite rising coverage
costs, rebates and discounts have stabilized increased prices and out-of-pocket spending.
“Net spending on retail prescription drug
coverage increased each year of the study period, as did the share of
commercial insurance premiums for retail prescription drug coverage,” the
report concluded.
“While the total cost of this coverage has
increased, patient out-of-pocket spending has remained stable in recent years.
Rebates and other discounts have played an increasingly important role in
partially offsetting the continued growth of list prices for brand name drugs.”
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