Prescription Drug Pricing Reports to Congress

02/20/2020

In response to a request by the House Committee on Appropriations for the Secretary of Health and Human Services (HHS) to submit a drug pricing report, the Office of the Assistant Secretary for Planning and Evaluation (ASPE) developed this report containing data and analyses related to prescription drug spending between 2006 and 2018 as well as prescription drugs benefiting from public funding for biomedical research since 2013.

The sections on prescription drug spending provide comparative gross prescription drug spending and prices as well as the top 10 highest-cost drugs and the top 10 most frequently prescribed drugs for each of the following: (1) The Medicare program under part B of title XVIII of the Social Security Act; (2) The Medicare prescription drug program under part D of title XVIII of the Social Security Act; (3) The Medicaid program under title XIX of the Social Security Act. The section on public funding for biomedical research provides the list of drugs that have been approved for sale by the Food and Drug Administration (FDA) in the past five years that have benefited significantly from government grants or research subsidies in either the pre-clinical or clinical stages of development, as well as spending in Medicare Part D and Medicaid for each of those drugs.

Earlier ASPE reports released in 2019 and 2016 fulfilled similar requests from the Congress for the periods 2006-2017 and 2003-2014 respectively.

KEY POINTS

  • Drug spending is concentrated in relatively few drugs in the Medicare and Medicaid programs. The top spending drugs and the level of concentration differ by program. For example, in 2018, the top ten highest-cost drugs by total spending accounted for 46 percent of spending in Medicare Part B, 18 percent of spending in Medicare Part D, and 14 percent of spending in Medicaid.
  • Drug spending has been growing rapidly in the Medicare Part B program, increasing at an average of 8.4 percent per year between 2006 and 2018, and 9.7 percent between 2017 and 2018. During the period 2006-18, as FFS enrollment in Part B between 2006 and 2018 was flat, spending per enrollee increased similarly at 8.3 percent per year on average.
  • While Medicare Part D drug spending has grown since the program began in 2006, the average annual rate of growth in spending in recent years has not increased as fast as drug spending in Medicare Part B. Medicare Part D program spending increased an average of 6.0 percent per year between 2006 and 2018, but dropped by 4.8 percent between 2017 and 2018, due partly to increased manufacturer rebates. During the period 2006-18, although Medicare Part D spending increased 6 percent annually, as Part D enrollees increased about 3.5 percent, spending per enrollee increased on average 2.5 percent per year.
  • Medicaid program spending on drugs increased an average of 4.8 percent per year between 2006 and 2018, but only 1.4 percent between 2017 and 2018 due in part to reduced spending on hepatitis C drugs. Medicaid program spending on prescription drugs increased 0.8 percent on a per enrollee basis between 2006 and 2018. Of particular note, in the list of top ten drugs by volume for Medicaid, hydrocodone-acetaminophen, a pain relief drug, was the most prescribed drug in 2014 and 2015. It is no longer in the top ten, which may be a result of government action to address the opioid epidemic.
  • All or virtually all new drugs approved for sale by the FDA between 2014 and 2018 benefited significantly from government grants or research subsidies in either the pre-clinical or clinical stages of development.

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