Net Spending On Retail Specialty Drugs Grew Rapidly, Especially For Private Insurance And Medicare Part D

Pharmacy Benefit Managers: History, Business Practices, Economics, and Policy

Importance

Pharmacy benefit managers (PBMs) play a major role in the provision of pharmacy services by acting as intermediaries between pharmacies, plan sponsors (insurance companies and employers), pharmaceutical manufacturers, and drug wholesalers. As their role and visibility have increased, PBMs have come under increased scrutiny from policymakers. However, no prior literature has systematically described the history, business practices, and policymaking of PBMs.

Objective

To provide an overview of the PBM industry, including its history, the evolution of services provided by PBMs, an assessment of the current policy landscape, and analysis of how proposed policies could affect PBM practices and patient care.

Evidence

This work reviews historical events; previous and current industry practices and publications; prior academic literature, existing statutes, regulations, and court cases; and recent legislative reforms and agency actions regarding PBMs.

Findings

Pharmacy benefit managers evolved in parallel with the pharmaceutical manufacturing and health insurance industries. The evolution of the PBM industry has been characterized by horizontal and vertical integration and market concentration. The PBM provides 5 key functions: formulary design, utilization management, price negotiation, pharmacy network formation, and mail order pharmacy services. Criticism of the PBM industry centers around the lack of competition, pricing, agency problems, and lack of transparency. Legislation to address these concerns has been introduced at the state and federal levels, but the potential for these policies to address concerns about PBMs is unknown and may be eclipsed by private sector responses.

Conclusions and Relevance

Pharmacy benefit managers are intermediaries in the pharmaceutical supply chain and perform multiple roles in the management and distribution of pharmaceuticals to patients. When regulating PBMs, it is important to adopt policies that address market failure problems by improving PBM competition as opposed to policies designed to serve the narrow financial interests of other market participants (eg, pharmacies, pharmaceutical manufacturers) without meeting the needs of consumers.

The Impact of Sharing Drug Rebates at the Point of Sale on Out-of-Pocket Payments for Enrollees in Employer-Sponsored Insurance

OBJECTIVES

This study aimed to estimate the impact of sharing drug rebates at the point of sale on out-of-pocket spending by linking estimated rebates to administrative claims data for employer-sponsored insurance enrollees in 2018.

METHODS

We applied the drug rebate rate to the retail price of each brand name drug fill, allocated the reductions to out-of-pocket spending based on cost-sharing provisions, and aggregated each individual's out-of-pocket spending across drug fills. We assumed that generic drugs have no rebates for employer-sponsored insurance. We assessed the impact of sharing rebates at the point of sale on out-of-pocket spending overall, for the therapeutic classes and specific drugs with the highest average out-of-pocket spending per user, and by health plan type.

RESULTS

Across 4 simulations with different assumptions about the degree of cross-fill effects, we found that 10.4% to 12.2% of enrollees in our sample would have realized savings on out-of-pocket spending if rebates were shared to the point of sale. Among those with savings, approximately half would save $50 or less, and 10% would save > $500 annually. We calculated that a premium increase of $1.06 to $1.41 per member per month among the continuously enrolled, insured population would be sufficient to finance the out-of-pocket savings in our sample.

CONCLUSIONS

Our study suggests that, for a small percentage of enrollees, sharing drug rebates at the point of sale would likely improve the affordability of high-priced brand name drugs, especially drugs that face significant competition.

Drug super spender tsunami: An integrated medical and pharmacy benefits assessment

BACKGROUND: As new rare-disease drug therapy, gene therapies, and high-priced cancer drugs receive US Food and Drug Administration approval, there is an increasing potential for drug super spender individuals with more than $250,000 annual drug cost. OBJECTIVE: To categorize all members in a large, commercially insured population by their total annual combined drug costs from both medical and pharmacy benefits and to determine the trend in drug super spender prevalence. METHODS: Using a commercially insured population with integrated medical and pharmacy benefits, all unique members with any enrollment between January 2016 and December 2019 were identified. The sum of total cost for all pharmacy claims plus all medical benefit claim lines for drugs was determined for each member, for each calendar year. Cost was defined as the plan plus member liability at network-discounted price, with no further adjustment for any coupons or rebates. Descriptive statistics were used to describe the drug super spender growth. RESULTS: There was an average of 17.9 million members per year with at least 1 month of eligibility through the 4-year study period. In 2016, a total of 2,994 members with more than $250,000 drug cost per member accounted for $1,324 million drug spend. In 2019, there were 5,894 super spender members (97% increase), accounting for $2,579 million drug cost (95% increase), which was 9.6% of $26,618 million total drug spend. CONCLUSIONS: In this large, commercially insured population, a small (32 per 100,000) number of drug super spender members comprise a disproportionate portion of the total drug expenditures, at $1 of every $10 dollars of total drug expenditures. Health plans need to understand the drug super spender trend and develop strategies to maintain health care affordability. DISCLOSURES: This study was funded internally by Prime Therapeutics LLC. Drs Starner and Gleason are employees of Prime Therapeutics LLC, a pharmacy benefits management company. Dr Bowen is a former employee of Prime Therapeutics LLC.

Importance of a usual source of care in choosing low-priced generic drugs: a cross-sectional study

BACKGROUND

The potential to lower pharmaceutical spending exists if physicians prescribe low-priced generics. This study aimed to empirically investigate the determinants of choosing low-priced generic drugs in South Korea.

METHODS

The 2018 HIRA-NPS dataset was used for this study. Among 1.45 million individuals, we identified the patients who were prescribed atorvastatin 10 mg for more than 60 days in 2018 as the study subjects, separated the subjects into high- and low-priced groups based on their average unit price, and applied a series of logistic regression models to elucidate the factors affecting low-priced drug choice.

RESULTS

Out of 60,984 subjects, only 10,228 (17%) were categorized into the low-priced group. The majority of the subjects (31%) were prescribed drugs at the maximum reimbursement price. Age of the subject, the frequency of visits to the institution, the existence of a usual source of care, and the institution type that a subject mainly visited for prescriptions were associated with being prescribed low-priced generics.

CONCLUSION

The association of being prescribed low-priced generics with the primary care institution and the usual source of care could be interpreted as evidence for the role of primary care in the continuity of patient-centred care. Creating health systems under which professionals act as perfect agents of a patient and/or an insurer is required.

Trends in the Concentration and Distribution of Health Care Expenditures in the US, 2001-2018

IMPORTANCE

The concentration of health care expenditures has important implications for managing risk pools, drug benefit design, and care management.

OBJECTIVE

To examine trends in the concentration of health care spending in different population groups and expenditure categories in the US between 2001 and 2018.

DESIGN, SETTING, AND PARTICIPANTS

This study is a cross-sectional analysis of Medical Expenditure Panel Surveys (MEPS) collected between 2001 and 2018. The MEPS is a household survey of medical expenditures weighted to represent national estimates in the US. Respondents were a nationally representative sample of the US civilian noninstitutionalized population. Data analysis was performed from December 2020 to February 2021.

MAIN OUTCOMES AND MEASURES

The main outcome is the concentration of health care expenditures as measured by the cumulative percentage of health expenditure vs percentage of ranked population. This study reports trends in the distribution of populations across 4 concentration curve parameters: top 50% expenditure (high spenders), next 49% expenditure (medium spenders), next 1% expenditure (low spenders), and nonspenders.

RESULTS

The mean sample size of the MEPS surveys used in the analysis was 34 539 individuals, and the sample size varied between 30 461 and 39 165 individuals over the years studied. On the basis of data from 30 461 MEPS respondents (15 867 women [52.1%]; mean [SD] age, 38.9 [24.0] years) in 2018, the top 4.6% (95% CI, 4.3%-4.9%) of the US population by spending accounted for 50% of health care expenditures. Although this fraction varied across population groups or expenditure categories, it remained remarkably stable over time with one exception: the concentration of spending on prescription drugs. In 2001, one-half of all expenditures on prescription drugs were concentrated in 6.0% (95% CI, 5.6%-6.4%) of the US population, but by 2018, this proportion had decreased to 2.3% (95% CI, 2.1%-2.5%). This change does not appear to be associated with a change in the overall share of prescription drug expenses, which increased by only a small amount, from 20.4% in 2001 to 24.8% in 2018.

CONCLUSIONS AND RELEVANCE

The overall concentration of health care expenditures remained stable between 2001 and 2018, but these findings suggest that there has been a sharp increase in the concentration of spending on prescription drugs in the US. This coincides with the genericization of many primary care drugs, along with a shift in focus of the biopharmaceutical industry toward high-cost specialty drugs targeted at smaller populations. If this trend continues, it will have implications for the minimum scale of risk-bearing and drug management needed to operate efficiently, as well as the optimal cost-sharing features of insurance products.