What Does The Medicare Drug Spending Dashboard Tell Us?

Lately drug spending has been a hot topic in the news. At the beginning of March, the Assistant Secretary for Planning and Evaluation (ASPE) reported that total U.S. drug spending reached $457 billion or 16.7% of total health expenditures – a rise of 12.7% over 2013 (see Observations On Trends In Prescription Drug Spending March 8, 2016).
And, like health care services, policymakers and payers are also focused on reducing spending on medications. For example, on March 8, the Centers for Medicare and Medicaid Services (CMS) released a new proposed rule to lower Medicare Part B drug spending by changing the reimbursement methodology for prescription drugs. Currently, under Medicare Part B, provider organizations are reimbursed for prescription drugs at the average sales price of a drug, plus a 6% add-on. The proposed rule would change this methodology to reimburse provider organizations for drugs at the average sales price, plus 2.5% and an add-on flat fee of $16.80. Additionally, the rule will test value-based purchasing strategies, such as indications-based pricing and reference pricing (see CMS Proposes To Test New Medicare Part B Prescription Drug Models To Improve Quality Of Care And Deliver Better Value For Medicare Beneficiaries). The rule has been met with a lot of pushback and concerns from provider organizations (see CMS Wants To Overhaul Part B Drug Payments. Oncologists Call The Plan ‘Absurd’ and Medicare Payment Overhaul Proposal Draws Opposition From Industry Stakeholders).
To make Medicare spending on pharmaceuticals more transparent, CMS released its first-ever Medicare Drug Spending Dashboard in December 2015. The dashboard is a list of 40 Medicare Part B drugs and 40 Medicare Part D drugs selected due to high total spending, high annual beneficiary user cost, or high average unit cost increase. Part B drugs purchased through Medicare Advantage plans were excluded from the list.
Although the dashboard pairs down the more than 4,300 Medicare Part B and Medicare Part D drugs to a list of 80, the drugs included represent a significant amount of the total spending on Medicare Part B and Part D drugs. In 2014, the 80 drugs on the list accounted for 39% of the total $143 billion Medicare spent on Part B and Part D drug programs. Medication spending by the Medicare Part D program totaled $121.5 billion and the 80 dashboard medications accounted for 33% of that spending, while Medicare Part B medication spending was $21.5 billion with dashboard medications accounting for 71% of that spending (see Medicare Drug Spending Dashboard Fact Sheet).
So what exactly does the list tell us about the drugs that Medicare spent the most on in 2014? I was struck by a couple issues. First, the top five drugs with the highest total spending were all Medicare Part D drugs. And, mental health drugs are largely absent from the dashboard.
The top five drugs with the highest total spending were all Medicare Part D drugs – Unsurprisingly, Sovaldi, which has made headlines for its high-cost treatment of hepatitis C, was the most expensive drug at more than $3.1 billion (see Gilead Considered $115K Price For Sovaldi, Senate Investigation Says, Why The Hepatitis Cure Sovaldi Is A Budgetary Disaster For Prisons, and Hepatitis Drug Among The Most Costly For Medicaid). But, these five drugs still represent a small portion of total Medicare drug spending– Sovaldi accounts for just 2.2% of Medicare Part B and Part D spending and Nexium, the drug with the second highest total spending, accounted for 1.9%.

Medicare Part B & D Drugs By Highest Total Spending, 2014
Drug	Generic Name	Coverage Type	Total Spending	Percent Of Total Medicare Drug Spending
Sovaldi	Sofosbuvir	Part D	$3,106,960,980.51	2.2%
Nexium	Esomeprazole Magnesium	Part D	$2,660,421,777.37	1.9%
Crestor	Rosuvastatin Calcium	Part D	$2,543,786,425.72	1.8%
Abilify	Aripiprazole	Part D	$2,527,319,031.60	1.8%
Advair Diskus	Fluticasone/Salmeterol	Part D	$2,276,374,748.70	1.6%
Total			$13,114,862,963.90	9.3%

Mental health drugs are largely absent from the dashboard – The list includes only a few mental health-related medications. There are two antipsychotic medications on the list – Ability and Invega Sustenna. The only other mental health drugs in this “top 80” dashboard are Clomipramine HCL (used to treat obsessions and compulsions associated with obsessive-compulsive disorder), Divalproex Sodium ER (anticonvulsant and mood stabilizer used to treat seizure disorders, manic phase of bipolar disorder, and migraine headaches), and Duloxetine HCl (selective serotonin and norepinephrine reuptake inhibitor antidepressant (SSNRI) used to treat major depression). Together, these five drugs account for 9% of dashboard spending and 3% of total Medicare drug spending.

Mental Health Drugs Included On Medicare Drug  Spending Dashboard
Drug	Generic Name	Coverage Type	Total Spending	Percent Of Total Medicare Drug Spending
Abilify	Aripiprazole	Part D	$2,527,319,031.60	1.8%
Duloxetine HCl	Duloxetine HCl	Part D	$1,426,877,758.40	1.0%
Invega Sustenna	Paliperidone Palmitate	Part D	$540,403,968.98	0.4%
Divalproex Sodium ER	Divalproex Sodium	Part D	$357,176,774.84	0.3%
Clomipramine Hcl	Clomipramine HCL	Part D	$79,334,397.90	0.1%
Total			$4,931,111,931.72	3.5%

Since 2015 was the first release of the dashboard, comparable data for previous years is not available. Future updates to the dashboard will be useful in identifying trends in pricing and utilization of medications in Medicare. For even more on the Medicare Drug Spending Dashboard, be sure to check out, What Are The Most Expensive Medicare Prescription Drugs? An OPEN MINDS Market Intelligence Report. The report answers a number of questions, including:

1. What Is The Medicare Drug Spending Dashboard?
2. What Are The Most Expensive Medicare Part B & Part D Drugs By Total Spending?
3. What Medicare Part B & Part D Drugs Have The Highest Annual Per User Cost?
4. What Medicare Part B & Part D Drugs Have The Highest Unit Cost Increases?
5. What Medicare Part B & Part D Drugs Have The Highest Average Annual Beneficiary Out-Of-Pocket Costs?

The attempt to make drug prices more transparent extends beyond Medicare – the President and at least 11 states are calling for increased transparency when it comes to drug prices (see High Drug Prices Prompt Demands for Transparency). CMS is also planning to release a similar dashboard for Medicaid sometime this year, allowing for comparisons between the two programs (see Medicare Drug Spending Dashboard Fact Sheet). We’ll cover these developments as they happen.