The Centers for Medicare and Medicaid Services (CMS) made drug cost data public for forty drugs administered by physicians and other professionals in the fee-for-service program under Medicare Part B and forty drugs provided through the Medicare Prescription Drug Program under Medicare Part D, representing approximately one-third of the $143 billion Medicare spending. Included in the data are brand and generic medicines that had the largest price increases last year.
The data, which is now public, includes information such as the total spending on the drug, the number of beneficiaries who are on the drugs, the total annual spending per user, the average annual beneficiary cost share, and the average annual cost change per unit.
In explaining the methodology and purpose behind the data release, which doesn’t include any information on the Part D rebates received by private plans, CMS did acknowledge the benefits that prescription drugs provide to patient health. However, as has been typical lately, they follow that statement of success with a mention of the rising drug costs, referring to prescription drugs as “a major driver of health care spending.”
The chosen drugs were based on the following criteria:
A. the drug is ranked in the top 15 in terms of total program spending (for either part B or D);
B. the drug is associated with a high annual per user spending based on claims data analyses (e.g., greater than $10,000 per user) and is ranked in the top 15 by overall program spending (if a drug already is selected based on (a) it is not eligible to be selected based on (b) criteria; or
C. the drug is ranked among the top 10 high unit cost increases (if a drug already is selected based on (a) or (b) it is not eligible to be selected based on (c) criteria).
As noted by Politico, fourteen of the drugs selected for the dashboard “had an annual increase of more than 40 percent,” and five part D drugs more than doubled in price from 2013 to 2014.
For a detailed methodology, click here.
Response and Analysis
PhRMA was less than impressed with this partial data release by CMS. They called it a “misleading and incomplete picture of actual Medicare spending on prescription medicines by focusing on a small subset of medicines.”
PhRMA also reminded patients that in another recent update made by CMS on Part B drug prices, CMS noted that “for most of the higher volume drugs…the prices changed 2 percent or less…[and] there are number of competitive market factors at work.”
Additionally, it is important to remember that these prices may also be a bit inflated since the Part D data does not reflect, “the substantial rebates negotiated by insurers and PBMs.” According to PhRMA, those rebates can often be as much as twenty to thirty percent and rebates increase, on average, annually.
PhRMA cites back to a post from earlier this year, May 1, 2015, which provides five things to know about CMS Part D data releases. One item on the list is that as soon as the data is released, it is already outdated. CMS cannot release the data instantaneously and as such, any data that is released will not take into account any recent fluctuations in price and newly released generics.
It isn’t just PhRMA who believes that this data release is not beneficial to patients. Scott Gottlieb, a fellow at the American Enterprise Institute and a former CMS and FDA official, calls the release a “policy document not a general data dump,” which is “framed to draw scrutiny to pricing” since it is targeting cost outliers. Mr. Gottlieb also noted that this release is “unprecedented in its granularity and [is] clearly framed with a policy purpose in mind.”
As always, it is imperative to remember that while discussions of drug prices are important (and even welcomed!), healthcare spending should be reviewed holistically. As PhRMA states, “CMS’ own actuaries recently forecasted a ‘leveling off of spending’ for medicines and project that spending on medicines will grow roughly in line with overall health care costs through the next decade.”