In 2015, brand-name specialty drugs accounted for about 30 percent of net spending on prescription drugs under Medicare Part D and Medicaid, but they accounted for only about 1 percent of all prescriptions dispensed in each program. View Document 461.86 KB
Why does Medicare Part D spend more on specialty drugs?
All rights reserved. Out-of-pocket (OOP) spending for specialty drugs is substantially higher in Medicare Part D compared with employer-sponsored insurance because of the Part D benefit design. Objectives: Per capita spending on specialty drugs increased 55% between 2014 and 2018.
How much do specialty medications cost?
Since specialty medications typically impact drug trend the most addressing the high cost of specialty medication is crucial. At a member level, plan sponsors see an average annual cost of $38,000 to cover a specialty patient’s drugs compared to just $492 for the coverage of a non-specialty patient’s costs.
How many people use specialty drugs?
Even though less than 2% of the population uses specialty drugs, those prescriptions account for a staggering 51% of total pharmacy spending 1. Since specialty medications typically impact drug trend the most addressing the high cost of specialty medication is crucial.
What do I need to know about Medicare prescription drug coverage?
Things to know. Drugs that aren't covered under Part B may be covered under Medicare prescription drug coverage (Part D). If you have Part D coverage, check your plan's Formulary to see what outpatient prescription drugs the plan covers.
What percentage of prescriptions are specialty?
Even though less than 2% of the population uses specialty drugs, those prescriptions account for a staggering 51% of total pharmacy spending1. Since specialty medications typically impact drug trend the most addressing the high cost of specialty medication is crucial.
What drugs does Medicare spend the most on?
10 prescription drugs Medicare spent most on in 2020: AARPEliquis. Use: Blood thinner for people with atrial fibrillation. ... Revlimid. Use: Cancer treatment. ... Xarelto. Use: Blood thinner for people with atrial fibrillation. ... Januvia. Use: Diabetes treatment. ... Trulicity. Use: Diabetes treatment. ... Imbruvica. ... Jardiance. ... Humira (Cf) pen.More items...•
What is a specialty drug tier?
Specialty tier drugs cost more than non-preferred drugs, and have no generic or similar medicine that could be taken instead. A typical plan will have price differences between non-preferred, preferred, and specialty tier medications. Preferred drugs are the most affordable type of brand-name medications.
Does Medicare use specialty pharmacy?
As a Medicare Part D member, with access to our large pharmacy network, you may fill your specialty medication at any pharmacy that is able to obtain the drug. Specialty pharmacies work exclusively with handling and administering complex specialty medications.
Does Medicare have to cover all drugs?
Medicare drug coverage covers generic and brand-name drugs. All plans must cover the same categories of drugs, but generally plans can choose which specific drugs are covered in each drug category. Plans have different monthly premiums.
Why does the US pay more for prescription drugs?
In the U.S., drugs with no competitors can be more expensive than in other countries, in part because the U.S. does not directly regulate or negotiate the price of drugs.
Who is the largest specialty pharmacy?
Centene has become one of the largest specialty pharmacy operators. The company acquired AcariaHealth in 2013. Its subsequent specialty pharmacy acquisitions include Foundation Care, WellCare's Exactus Pharmacy Solutions specialty pharmacy, and PANTHERx Rare Pharmacy, which had been the largest independent pharmacy.
What is a Tier 5 specialty drug?
Tier 5 - Nonpreferred Specialty: In Tier 5 are nonpreferred specialty drugs that likely have a more cost-effective generic or preferred alternative available. Tier 5 has the highest copayment for specialty drugs. In some cases, they may not be covered.
What is the average cost of specialty drugs?
Had they been included, the average cost of a specialty drug would have been $136,401 in 2020. This is more than twice the median U.S. household income of $65,712.
Why are specialty drugs so expensive?
The high cost of specialty drugs can also be attributed to the special handling they often require: prescription from a specialist, administration by a medical professional in a clinical setting, and significant patient management to make sure the drugs are being used correctly and safely.
Is GoodRx better than Medicare Part D?
GoodRx can also help you save on over-the-counter medications and vaccines. GoodRx prices are lower than your Medicare copay. In some cases — but not all — GoodRx may offer a cheaper price than what you'd pay under Medicare. You won't reach your annual deductible.
Does GoodRx work with specialty pharmacies?
Current Walgreens Specialty Pharmacy Prices and Discounts Use GoodRx to look up prices and discount coupons at Walgreens Specialty Pharmacy and save up to 80% on your prescriptions. Just search for your medication and we will show you the cost at various pharmacies near you along with free coupons to save you money.
How much did Medicare spend on specialty drugs in 2015?
Net spending on specialty drugs in Medicare Part D rose from $8.7 billion in 2010 to $32.8 billion in 2015. Net spending on specialty drugs in Medicaid roughly doubled from 2010 to 2015, rising from $4.8 billion to $9.9 billion. In 2015, brand-name specialty drugs accounted for about 30 percent of net spending on prescription drugs ...
What percentage of prescriptions were brand name drugs in 2015?
In 2015, brand-name specialty drugs accounted for about 30 percent of net spending on prescription drugs under Medicare Part D and Medicaid, but they accounted for only about 1 percent of all prescriptions dispensed in each program.
What is specialty drug?
In recent years, the prices charged for certain types of drugs— referred to as specialty drugs—have become a source of concern for many policymakers. Such drugs typically treat chronic, complex, or rare conditions, frequently have high prices, and may require special handling or patient monitoring.
Why is Medicare Part D important?
Because Medicare Part D and Medicaid are two large purchasers of prescription drugs, increases in spending for those drugs could have important implications for the federal budget. In this report, the Congressional Budget Office examines the net prices paid for specialty drugs and spending on those drugs in Medicare Part D and Medicaid over ...
What is the most common drug taken by Medicare beneficiaries?
Among RA drugs, the most commonly taken drug by ESI beneficiaries was Humira, by 60% of patients, but the most common drug taken by Medicare beneficiaries was Enbrel, taken by 54% and 53% of FFS and MA beneficiaries, respectively. Despite differences in drug choice, OOP costs were similar within an insurance type.
Why is OOP spending higher in Medicare?
We compared prescription drug spending between ESI and Medicare and found that OOP spending was substantially higher among Medicare enrollees compared with ESI enrollees, because Medicare is structured for beneficiaries to pay a percentage of a drug’s list price. Higher OOP spending in Medicare is likely to pose a challenge for individuals as they make the transition into Medicare, with potential implications for management of their diseases and, ultimately, health outcomes. Rethinking the design of the Part D benefit given the growth in specialty drugs to move toward fixed costs, rather than a percentage of drug costs, may be necessary to ensure that Medicare beneficiaries receive seamless care as they enter the program.
What is the most common drug used for MS patients?
The majority of MS patients took Copaxone in both ESI and Medicare. For the cancer population, the most commonly used drug was Revlimid (used by 48% of Medicare beneficiaries and 46% of ESI enrollees).
Is OOP higher in Medicare?
Our main finding is that OOP spending for specialty drugs treating RA, MS, cancer, and hepatitis C was significantly higher in Medicare compared with ESI from 2013 to 2017. This was likely due to the standard Medicare Part D benefit structure, which determines OOP spending as a percentage of the drug’s list price rather than a fixed co-payment, which is more common in ESI (although some plans treat specialty drugs differently and can use coinsurance). 25 We found that the differences between ESI and Medicare arose primarily during the coverage gap (donut hole) phase. Despite a closing of the coverage gap over the course of our study period, the persistent difference in OOP spending between ESI and Medicare points to fundamental differences in design between the 2 insurance types, with implications for enrollees. Small but statistically significant differences were seen between FFS and MA plans, with the MA plans having slightly higher OOP spending.
How much does Medicare Part D cost?
Specialty tier drugs—defined by Medicare as drugs that cost more than $670 per month in 2019—are a particular concern for Part D enrollees in this context.
How much does a zepatier cost?
Median annual out-of-pocket costs in 2019 for 28 of the 30 studied specialty tier drugs range from $2,622 for Zepatier (for hepatitis C) to $16,551 for Idhifa (for leukemia), based on a full year of use; two of the 30 drugs are not covered by any plan in our analysis in 2019.
Is Zepatier covered by Medicare?
For the 14 specialty drugs in our analysis that are not covered by some or all plans in 2019, the median total annual cost when not covered ranges from $26,209 for Zepatier to $145,769 ...
Can Medicare pay out of pocket for specialty drugs?
Figure 1: Medicare Part D beneficiaries can pay thousands of dollars out of pocket for specialty tier drugs, with the majority of costs for many drugs above the catastrophic threshold. Part D enrollees taking high-cost specialty tier drugs can incur significant costs in the catastrophic phase.
What is a specialty drug?
The Pew Charitable Trusts defines specialty drugs as medications with high costs for a course of treatment or a year of therapy. Some health plans also categorize drugs as specialty if they are novel therapies; require special handling, monitoring, or administration; or are used to treat rare conditions.
Cost implications
The estimated price tag for treating a patient with a specialty drug is high: For some chronic conditions, a year of treatment with a specialty drug can exceed $100,000. 4 In 2015, only 1 to 2 percent of the American public used specialty drugs, yet they accounted for approximately 38 percent of total drug expenditures.
Managing specialty drug costs
To deal with the high cost of specialty medications, payers in public and private programs use a number of strategies to control patient OOP costs and member premiums, such as negotiating with manufacturers to obtain rebates and other discounts that help reduce the prices that plan members pay for medications.
Looking forward
Many specialty drugs offer meaningful therapeutic advances over existing treatments. However, if current trends continue, the high cost of specialty drugs will have a significant impact on overall health care spending and patients’ OOP costs.
What is specialty medicine?
Specialty drugs typically treat chronic, complex, or rare conditions, frequently have high prices, and may require special handling or monitoring of patients. From 2010 through 2015, such drugs accounted for a growing share of new drugs introduced to the market, and they were introduced at much higher prices than nonspecialty drugs. In 2015, brand-name specialty drugs accounted for about 30 percent of total net spending on prescription drugs in both Medicare Part D and Medicaid, although they accounted for only about 1 percent of all prescriptions dispensed in each program.
What are the two types of Medicare Part D plans?
Two categories of plans participate in Medicare Part D: stand-alone prescription drug plans , which enroll beneficiaries who receive their other Medicare coverage through the traditional FFS program, and Medicare Advantage prescription drug plans. The plans compete for enrollees on the basis of premiums, benefit design, specific drugs covered, and quality of services.
Does Medicaid cover outpatient pharmacy?
(The federal subsidy amount varies across states.) Medicaid outpatient pharmacy benefits may be delivered by Medicaid FFS, wherein states directly reimburse pharmacies for prescription drugs. Alternatively, states may contract with private managed care plans to administer the drug benefits together with medical benefits. Under the Medicaid program, beneficiaries generally have low cost sharing for prescription drugs. According to CMS, the federal share of Medicaid drug spending on outpatient pharmacy benefits, net of rebates, was $21 billion in 2015.33
Abstract
Specialty pharmaceuticals include most injectable and biologic agents used to treat complex conditions such as rheumatoid arthritis, multiple sclerosis, and cancer.
Study Data And Methods
We evaluated pharmacy claims data from a 20 percent random sample of Medicare beneficiaries, through a data use agreement with the Centers for Medicare and Medicaid Services. The data included pharmacy claims for 2007–11 for elderly Medicare beneficiaries enrolled in stand-alone prescription drug plans or in Medicare Advantage plans.
Study Results
There was a 47 percent increase in per beneficiary spending on specialty drugs during the study period. Nonetheless, specialty drug spending remained a small portion of total drug spending in our sample.
Discussion
In light of the recent attention focused on growth in spending on specialty pharmaceuticals, many payers have contended that covering high-cost specialty drugs will render insurance premiums unaffordable.
Conclusion
Specialty drug spending per user has increased considerably in recent years. However, this spending represents a small portion of overall drug spending per beneficiary. Moreover, the implementation of ACA-based doughnut hole cost-sharing reductions has resulted in considerable decreases in out-of-pocket expenditures among specialty drug users.
ACKNOWLEDGMENTS
The research reported in this article was supported by the National Institutes of Health (Grant Nos. P01AG033559 and P30AG024968). Erin Trish also acknowledges support from the Agency for Healthcare Research and Quality (under Grant No. T32HS00046).
NOTES
1 IMS Institute for Healthcare Informatics . Medicine use and shifting costs of healthcare: a review of the use of medicines in the United States in 2013 [Internet]. Parsippany (NJ) : IMS Health ; 2014 Apr [cited 2014 Sep 25 ].
What is Medicare approved amount?
Medicare-Approved Amount. In Original Medicare, this is the amount a doctor or supplier that accepts assignment can be paid. It may be less than the actual amount a doctor or supplier charges. Medicare pays part of this amount and you’re responsible for the difference.
What is Medicare Part A?
Medicare Part A (Hospital Insurance) Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. coverage. Transplant drugs can be very costly. If you’re worried about paying for them after your Medicare coverage ends, talk to your doctor, nurse, or social worker.
How long does Medicare cover after kidney transplant?
If you're entitled to Medicare only because of ESRD, your Medicare coverage ends 36 months after the month of the kidney transplant. Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. coverage. Transplant drugs can be very costly.
What happens if you get a drug that Part B doesn't cover?
If you get drugs that Part B doesn’t cover in a hospital outpatient setting, you pay 100% for the drugs, unless you have Medicare drug coverage (Part D) or other drug coverage. In that case, what you pay depends on whether your drug plan covers the drug, and whether the hospital is in your plan’s network. Contact your plan to find out ...
What is Part B covered by Medicare?
Here are some examples of drugs Part B covers: Drugs used with an item of durable medical equipment (DME) : Medicare covers drugs infused through DME, like an infusion pump or a nebulizer, if the drug used with the pump is reasonable and necessary.
Does Medicare cover transplant drugs?
Medicare covers transplant drug therapy if Medicare helped pay for your organ transplant. Part D covers transplant drugs that Part B doesn't cover. If you have ESRD and Original Medicare, you may join a Medicare drug plan.
Does Part B cover drugs?
covers drugs Part B doesn't cover. If you have drug coverage, check your plan's. A list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits. Also called a drug list. to see what outpatient drugs it covers.
