Utilization and Spending Trends in Medicaid Outpatient Prescription Drugs, 2015-2019

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Prescription drug spending in Medicaid and different well being applications has returned to the nationwide coverage debate. This evaluation examines Medicaid outpatient prescription drug utilization and spending earlier than rebates over the 2015 to 2019 interval, which is useful for understanding current value drivers and areas for focused coverage motion. Key takeaways embrace:

  • Utilization, measured by way of the variety of prescriptions, elevated by 5% from 2015 to 2019. Utilization elevated from 2015 to 2017 after which declined within the years following.
    • The ten most continuously prescribed drug teams, which included Analgesics/Antipyretics, psychotherapeutic brokers, cardiac medication, antibiotics, and anticonvulsants, have been comparatively secure all through the interval, with the identical teams making up the highest 5 drug teams by utilization yearly. These drug teams deal with frequent sicknesses and well being situations and replicate the well being wants of Medicaid beneficiaries.
    • Notably, psychotherapeutic brokers, together with antidepressants, have been the second most prescribed drug group all through the interval of examine, highlighting the important thing function Medicaid performs in masking and financing behavioral well being care.
    • Opioid prescriptions used to deal with ache declined 41% over the interval of examine, whereas prescriptions to deal with opioid dependancy and overdose elevated.
  • Whereas Medicaid internet spending on pharmaceuticals remained virtually unchanged, spending earlier than rebates elevated by 23% from 2015 to 2019. Spending earlier than rebates adopted an analogous sample to utilization, growing from 2015 to 2017 and lowering in 2018; nonetheless, as utilization continued to lower in 2019, spending elevated once more by 9%. Developments in gross spending and utilization present essential context for pharmacy profit coverage by highlighting underlying value elements.
    • The ten most expensive drug teams have been comparatively secure all through the interval, except for molecular focused remedy medication, which grew from the 12th most expensive drug group in 2015 to the 5th most expensive drug group in 2019 earlier than rebates.
    • Antivirals have been the most expensive drug group earlier than rebates yearly from 2015 to 2019. Spending on antivirals, and particularly hepatitis C medication, is disproportionate to their utilization.
    • Antidiabetics spending earlier than rebates grew by 53% over the interval of examine, pushed by spending on newer, non-insulin antidiabetic medication.
  • Generic medication accounted for the overwhelming majority of prescriptions over the 2015 to 2019 interval, whereas model medication accounted for the overwhelming majority of spending. All through the interval, model medication accounted for a rising share of spending.
  • Spending on organic merchandise is disproportionate to their utilization, accounting for little over 1% of prescriptions yearly however between 15% and 21% of Medicaid spending earlier than rebates over the interval.

States remain concerned concerning the entry of recent high-cost medication to the market and report that creating methods and insurance policies to handle these medication is a high precedence. There has additionally been current policy discussion about federal motion to address the price of new therapies by means of the FDA accelerated approval pathway in addition to gene and cell therapies. Knowledge on utilization and spending can assist spotlight potential implications of coverage proposals.

Introduction

Prescribed drugs have returned to the nationwide coverage debate, with each Congress and the administration creating proposals to handle drug costs. Although consideration in present federal actions is basically targeted on Medicare and personal insurance coverage drug costs, federal laws additionally has been lately introduced or enacted that might have an effect on Medicaid prescription drug coverage. States additionally remain concerned concerning the budgetary affect of recent, excessive value medication and Medicaid drug spending, given fiscal pressures. Understanding utilization and spending patterns in Medicaid can assist illustrate the potential results of proposed coverage modifications or focused coverage actions.

This temporary analyzes information on Medicaid drug spending and utilization from 2015 to 2019, the interval after the foremost enlargement of Medicaid below the ACA and thru most up-to-date full information obtainable. It examines developments throughout drug teams, model or generic standing, and biologic standing and takes a better take a look at among the drug teams which are experiencing modifications in utilization and spending or have been the topic of current coverage debates. As described in additional element in Appendix B, it’s based mostly on Medicaid State Drug Utilization Knowledge merged with IBM Micromedex RED BOOK information to investigate developments by drug group and model or generic standing. It additionally incorporates information from the Meals and Drug Administration (FDA) to investigate developments amongst organic merchandise. Due to information restrictions, spending doesn’t replicate rebates. This evaluation updates previous analysis of Medicaid outpatient prescription drug developments.

Background: Construction of the Medicaid Prescription Drug Profit

The Medicaid prescription drug benefit is an optionally available profit that every one states present. The state might present the profit in a fee-for-service atmosphere or by means of managed care. Most states provide the profit by means of managed care, though some states have moved to carve out particular lessons or the pharmacy profit altogether. State Medicaid applications reimburse pharmacies for pharmaceuticals based mostly on the ingredient prices for the drug and a shelling out price for filling the prescription; they don’t purchase medication instantly from producers.

Underneath the Medicaid Drug Rebate Program (MDRP), producers that need their medication lined by Medicaid should signal an settlement with the Secretary of Well being and Human Providers stating that they are going to rebate a specified portion of the Medicaid fee for the drug to the states, who in flip share the rebates with the federal authorities. In return, Medicaid should cowl virtually all FDA-approved medication that these producers produce. Nevertheless, state Medicaid applications can and do implement drug utilization management methods, equivalent to most popular drug lists and prior authorizations, to handle utilization and spending.

Along with federal statutory rebates, most states negotiate supplemental rebates. Each statutory and supplemental rebates account for a sizeable share of prescription drug spending, reducing combination drug spending by about 55% in 2019. Rebates additionally elevated throughout the interval of this evaluation, leaving Medicaid net spending in 2019 virtually the identical as net spending in 2015. Rebates differ throughout model and generic medication and specialty and non-specialty medication as a result of rebate formulation and guidelines that require Medicaid to obtain the “finest worth” obtainable to different purchasers (excluding sure authorities applications). A CBO evaluation lately discovered that on common, Medicaid obtained rebates of roughly 77% of the Medicaid retail worth for sure brand-name medication.  Medicaid rebates additionally embrace an inflation-based part to account for rising costs over time, which insulates this system from massive worth hikes. The precise rebate on a given drug is proprietary for each statutory and supplemental rebates. Due to this, it isn’t doable to incorporate them on this evaluation of developments by drug or drug group. Whereas rebates have implications for internet Medicaid spending, understanding developments in gross spending and utilization supplies essential context for pharmacy profit coverage by highlighting underlying value elements.

Developments in Prescription Drug Utilization and Spending

Medicaid drug utilization and spending earlier than rebates adopted comparable developments from 2015-2018 however diverged in 2019. Medicaid outpatient drug utilization elevated from 695.7 million prescriptions in 2015 to 763.7 million in 2017, a mean annual development of 5% (Determine 1). Following an analogous sample, Medicaid spending earlier than rebates additionally elevated from $55.8 billion in 2015 to $64.6 billion in 2017, representing common annual development of 8%. From 2017 to 2018, utilization and spending each declined by 3%, lowering from 763.7 million prescriptions and $64.6 billion all the way down to 742.3 million prescriptions and $62.9 billion, respectively. This decline probably displays declines in Medicaid enrollment, which declined by 1.6 million in 2018. From 2018 to 2019, utilization decreased by 1%, all the way down to 731.3 million prescriptions, whereas spending diverged and grew by 9%, as much as $68.5 billion. The rise in spending earlier than rebates in 2019 might replicate the launch of expensive new brand drugs and growing record costs.

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Determine 1: Development in Quantity and Spending for Medicaid Outpatient Prescriptions, 2015-2019

Developments by Drug Group

The highest ten most frequent drug teams by variety of prescriptions accounted for over half of all prescriptions every year from 2015 by means of 2019 and have been comparatively secure throughout the interval. The exception is antihyperlipidemic medication, which changed anxiolytics (a kind of psychotherapeutic) as the tenth most prescribed drug group beginning in 2017 (Desk 1 and Appendix Table A1). Additional, the identical teams made up the highest 5 drug teams by utilization yearly. All through all years, analgesics/antipyretics accounted for the biggest variety of prescriptions, and psychotherapeutic brokers accounted for the second largest variety of prescriptions. In 2019, each teams collectively accounted for 20% of all Medicaid prescriptions (Determine 2). Throughout the drug group psychotherapeutic brokers, antidepressants made up greater than 70% of all psychotherapeutic prescriptions every year.

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Determine 2: Variety of Medicaid Outpatient Prescriptions by Drug Group, 2019

Drug Group Typical Use Rating by 12 months
2015 2016 2017 2018 2019
Analgesics/Antipyretics Cut back ache, fever, irritation 1 1 1 1 1
Psychotherapeutic Brokers Deal with psychosis and despair 2 2 2 2 2
Cardiac Medication Deal with medical situations related to the guts or circulatory system 4 3 3 3 3
Antibiotics Deal with bacterial infections 3 4 4 4 4
Anticonvulsants Deal with epileptic seizures 5 5 5 5 5
Antidiabetic Brokers Deal with diabetes 8 7 6 6 6
Allergy Immunotherapy & Antihistamines Allergy remedy 6 6 7 7 7
Sympathomimetic Brokers Stimulate adrenergic receptors 7 8 8 8 8
Adrenals & Combos Cut back irritation 9 9 9 9 9
Antihyperlipidemic Medication Cut back lipid ranges 12 12 10 10 10
SOURCES: KFF evaluation of 2015-2019 State Drug Utilization Knowledge; IBM Micromedex RED BOOK, December 2020.

Equally, the ten most expensive drug teams accounted for nearly two thirds of Medicaid spending earlier than rebates every year, and the composition of the highest ten most expensive drug teams earlier than rebates remained comparatively secure all through the interval (Desk 2 and Appendix Table A2). All through all years, antivirals accounted for the biggest share of gross drug spending. Though they switched locations in 2017, antidiabetic brokers and psychotherapeutic brokers persistently ranked second and third in spending by 12 months. In 2019, antivirals, antidiabetic brokers, and psychotherapeutic brokers collectively made up 30% of gross spending on Medicaid outpatient prescriptions (Determine 3). Moreover, 5 of essentially the most prescribed drug teams have been additionally 5 of the most expensive drug teams every year: antidiabetic brokers, psychotherapeutic brokers, adrenals & mixtures, analgesics/antipyretics, and anticonvulsants. Psychotherapeutic brokers have been persistently the second most prescribed drug group and second or third most expensive drug group earlier than rebates every year, highlighting the important thing function Medicaid performs in covering and financing behavioral health care. Nevertheless, these developments in gross spending might not replicate internet fee, given variations in rebates to Medicaid throughout model and generic medication, amongst different elements.

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Determine 3: Gross Spending on Medicaid Outpatient Prescriptions by Drug Group, 2019

Drug Group Typical Use Rating by 12 months
2015 2016 2017 2018 2019
Antivirals Deal with viral infections 1 1 1 1 1
Antidiabetic Brokers Deal with diabetes 3 3 2 2 2
Psychotherapeutic Brokers Deal with psychosis and despair 2 2 3 3 3
Immunosuppressants Deal with autoimmune ailments and used for organ transplant 7 5 4 4 4
Molecular Focused Remedy Most cancers remedy 12 9 7 6 5
Adrenals & Combos Cut back irritation 5 6 6 7 6
Stimulant Pace up the central nervous system 4 4 5 5 7
Coagulants & Anticoagulants Promote blood clotting or thinning 9 10 10 9 8
Analgesics/Antipyretics Cut back ache, fever, irritation 6 7 8 10 9
Anticonvulsants Deal with epileptic seizures 8 8 9 8 10
NOTE: Spending quantities don’t embrace rebates.
SOURCES: KFF evaluation of 2015-2019 State Drug Utilization Knowledge; IBM Micromedex RED BOOK, December 2020.

Antivirals

Whereas utilization of antivirals total elevated over the interval, the variety of prescriptions for antiretrovirals (medication largely used to deal with or forestall HIV) and different medication used for hepatitis C remedy have declined barely lately. Medicaid performs a considerable function in masking folks with HIV or Hepatitis C, offering insurance coverage to 42% of the 1.2 million folks with HIV and a disproportionate share of the 2.4 million people with hepatitis C within the US. Prescribed drugs are a core part of remedy for these well being situations. Utilization of antiviral medication elevated over the interval by 21% pushed by elevated use of different antiviral medication, equivalent to those who deal with the flu. Utilization of antiretrovirals and different hepatitis C medication decreased barely over the interval, making up 30% of antiviral prescriptions by 2019 (Determine 4). Declines in antiretrovirals might partially replicate substitution towards single-dose regimens, which elevated by roughly 0.4 million prescriptions over this era. It might additionally characterize better stability in prescription regimens inside a calendar 12 months or be indicative of churn within the Medicaid program together with with personal insurance coverage and the Ryan White HIV/AIDS Program. Declines in hepatitis C medication might replicate utilization controls state Medicaid applications positioned on hepatitis C medication over the interval or declining demand as a rising variety of folks obtain the healing remedy. Over the interval, antiretrovirals are extra generally prescribed than hepatitis C medication as a result of comparatively bigger variety of folks with HIV lined by Medicaid, expanded attain of those medication by means of introduction of pre-exposure prophylaxis (PrEP) medication to stop HIV, and the truth that antiretrovirals are a upkeep drug taken over a lifetime (versus healing hepatitis C medication taken over one course).

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Determine 4: Variety of Medicaid Outpatient Prescriptions for Antiviral Medication, by Sort 2015-2019

Over your entire interval, antivirals have been persistently the most expensive drug group in Medicaid earlier than rebates, pushed by spending for medication used to deal with HIV and hepatitis C medication. Antivirals accounted for 11% of gross Medicaid outpatient drug spending in 2019 (Determine 3). Antiretrovirals and hepatitis C medication accounted for, on common, 91% of Medicaid antiviral spending every year earlier than rebates (Determine 5). Gross spending on antivirals is disproportionate to their utilization (they weren’t among the many high ten most continuously prescribed drug teams) and displays the excessive value of those medication. Whereas gross spending on hepatitis C medication has decreased since 2016 as a consequence of competitors, these medication, like Harvoni and Sovaldi, account for a comparatively massive share of spending as a consequence of their high per-treatment cost.

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Determine 5: Gross Spending on Medicaid Outpatient Antiviral Medication, by Sort, 2015-2019

Opioids

Patterns of prescriptions for opioids have shifted lately, with a rise within the variety of prescriptions to deal with opioid dependancy and overdose and a decline within the variety of prescriptions to deal with ache. Opioids have been extensively prescribed throughout the interval of examine, with opiate agonists, partial agonists, and antagonists collectively accounting for five.4% of all Medicaid outpatient prescriptions in 2015. Nevertheless, opioid prescriptions declined over time, lowering from 37.3 million prescriptions in 2015 to twenty-eight.9 million prescriptions in 2019 (Determine 6). Whereas most opioids are used to deal with ache, the opiate partial agonist, buprenorphine, and the opiate antagonists, naloxone and naltrexone, are used to deal with dependancy and overdose. Buprenorphine and opiate antagonists made up an growing share of opioid prescriptions throughout the interval, rising from 9% in 2015 to 30% in 2019. If opioids are examined apart from buprenorphine and opiate antagonists, the variety of opioid prescriptions fell from 34.1 million in 2015 to twenty.3 million in 2019, a 41% decline.

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Determine 6: Quantity Medicaid Outpatient Prescriptions for Opioids, by Sort, 2015-2019

Whereas total gross spending on opioids remained comparatively secure throughout the interval, buprenorphine and opiate antagonists made up an growing share of opioid spending earlier than rebates. The share of gross opioid spending on buprenorphine and opiate antagonists grew from 36% in 2015 to 71% in 2019 (Determine 7). On the similar time, gross spending on different opiate agonist and partial agonist prescriptions, the overwhelming majority of that are generic, decreased by 49% over the interval, reflecting the decline within the variety of prescriptions to deal with ache.

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Determine 7: Gross Spending on Medicaid Outpatient Prescriptions for Opioids, by Sort, 2015-2019

Antidiabetics

Antidiabetics have been persistently within the high 10 most prescribed and most expensive drug teams all through the interval of examine. Their use grew 17% from 2015 to 2019, and Medicaid gross spending grew 53% from 2015 to 2019 (Appendix Table A1 and Determine 8). Whereas insulins remained the biggest supply of gross spending on antidiabetics, non-insulin antidiabetic treatments, equivalent to glucagon-like peptide-1 (GLP-1) receptor agonists and sodium glucose co-transporter (SGLT) inhibitors accounted for a rising share of spending (Determine 8).

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Determine 8: Gross Spending on Medicaid Outpatient Prescriptions for Antidiabetics, 2015-2019

Medicaid spending on insulins earlier than rebates remained comparatively secure all through the interval. Whereas the value of an insulin prescription nearly doubled between 2012 and 2016, Medicaid gross spending on insulin has remained round $4 billion since 2016, other than 2017 when spending on insulins rose to $4.2 billion (Determine 8). Additional, Medicaid gross spending per unit of insulin leveled off in 2016, then started to fall from a excessive of $0.33 in 2017 to $0.30 in 2019 (Determine 9). It’s not clear from this information what has been driving this pattern. Throughout payers, there was a nationwide sample of declining insulin prices lately as a consequence of current approvals of biosimilars and generics. Nevertheless, as a result of model medication are decrease value on internet for the Medicaid program, probably as a consequence of excessive rebate quantities, Medicaid insulin utilization stays concentrated in model medication, and generic medication should not equally driving down insulin spending for Medicaid.

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Determine 9: Development in Medicaid Gross Spending Per Unit of Insulin, 2015-2019

Molecular Focused Remedy

Gross Medicaid spending on molecular focused remedy (a kind of focused most cancers remedy) greater than doubled throughout the interval of examine. Spending on these medication grew from the 12th most expensive drug group in 2015 to the 5th most expensive drug group in 2019 (Desk 2 and Determine 10). Spending on these medication is disproportionate to their utilization, with these medication making up solely 0.1% of prescriptions however 5% of total Medicaid spending by 2019 (Determine 3). This development displays the rising cost of cancer treatment and signifies a shift towards extra tailored cancer treatment, utilizing therapies to focus on particular molecular options of tumors alongside different most cancers therapies.

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Determine 10: Gross Spending on Medicaid Outpatient Molecular Focused Remedy, 2015-2019

Developments by Model and Generic Standing

State choice for model or generic medication is complicated as a result of incentives created by the Medicaid Drug Rebate Program. As a result of generic medication have decrease record costs than brand-name medication however are nonetheless therapeutically equal to their corresponding model medication, state Medicaid applications might implement required generic substitution insurance policies to steer utilization to generic medication the place doable., Nevertheless, as a result of Medicaid rebates are larger on brand-name medication than generics, internet prices may very well be decrease for brand-name medication in Medicaid, main some states to implement “model over generic” applications. That is particularly the case on the preliminary entrance of a generic equal into the market, when a state should have supplemental rebate agreements and different massive rebates that offset the value of the model drug. Estimates recommend these applications can result in substantial financial savings.

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Determine 11: Variety of Medicaid Outpatient Prescriptions for Model and Generic Medication, 2015-2019

Generic medication accounted for the overwhelming majority of Medicaid outpatient prescriptions whereas model medication accounted for the overwhelming majority of Medicaid spending earlier than rebates throughout the interval. The rise in variety of Medicaid prescriptions from 2015 to 2017 was pushed by the rising variety of generic medication, whereas the variety of model drug prescriptions over this era modified little or no. The variety of each model and generic prescriptions fell from 2017 to 2019, however model prescriptions decreased extra shortly (14% drop) in contrast generic prescriptions (3% drop) (Determine 11). Nevertheless, model medication persistently accounted for a comparatively massive share of Medicaid spending earlier than rebates from 2015 by means of 2019, and this share elevated barely over time (from 74% to 79%) (Determine 12). The expansion in model spending regardless of decreases in each model and generic prescriptions displays nationwide developments attributable to growing record costs for model medication and the launch of high-priced new medication throughout the interval. Gross model spending elevated 8% from 2018 to 2019, probably pushed by the launch of high cost, new specialty brand drugs like Biktarvy, Hemlibra, and Epidiolex. Different evaluation exhibits that whereas different medication have misplaced exclusivity over this era, the financial savings as a consequence of introduction of competitors for these medication should not keeping pace with the elevated spending from the new drugs launching. There have additionally been worth will increase for present model medication, like Humira, however Medicaid could also be protected against a few of these worth hikes over time as a result of inflationary part of the MDRP.

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Determine 12: Gross Spending on Medicaid Outpatient Prescriptions for Model and Generic Medication, 2015-2019

Developments by Biologic Standing

Biologics account for a really small share of prescriptions however a disproportionate share of gross Medicaid drug spending. Biologics are merchandise, equivalent to medication or vaccines, derived from dwelling organisms with chemical buildings extra difficult than conventional small molecule medication. Biosimilars are merchandise which are deemed “extremely comparable” or “interchangeable” with a referenced biologic. Biologics are typically priced expensively and face less competition from biosimilars than small molecule model medication face from generics. Moreover, whereas there was an increase in each biologics and biosimilars authorized by the FDA from 2015 to 2019, some FDA authorized biosimilars should not as a consequence of enter the US marketplace for a couple of years or have delayed market entry to keep away from patent litigation. Throughout your entire interval from 2015-2019, comparatively few prescriptions in Medicaid have been biologics, however the quantity Medicaid spends earlier than rebates on organic merchandise is outsized. Whereas organic merchandise persistently accounted for somewhat over 1% of Medicaid outpatient prescriptions yearly, they accounted for between 15% and 21% of Medicaid spending on prescriptions earlier than rebates over the interval (Determine 13).

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Determine 13: Biologics as a Share of Variety of Medicaid Prescriptions and Outpatient Drug Gross Spending, 2015-2019

Wanting Forward

Medicaid prescription drug coverage is more likely to stay a problem at each the federal and state ranges as a consequence of budgetary constraints and the entry of recent, high-cost medication. States remain concerned concerning the entry of recent high-cost medication to the market and report that creating methods and insurance policies to handle these medication is a high precedence. There has additionally been current policy discussion about methods on the federal stage to address the price of new therapies by means of the FDA accelerated approval pathway in addition to gene and cell therapies.

Congress might take motion to handle drug costs in each Medicaid and within the well being system extra broadly. Current COVID-19 reduction laws features a provision that lifts the Medicaid rebate cap (at the moment set at 100% AMP) starting in 2024 and is estimated to scale back direct Medicaid spending by $14.5 billion. For medication with massive worth will increase over time, the Medicaid program might obtain rebates from producers that exceed the value of the drug. Decreasing drug costs stays a spotlight of policymakers, notably for people in Medicare and with personal insurance coverage, however any insurance policies that change underlying drug costs can even have implications for Medicaid drug spending.

This work was supported partially by Arnold Ventures. We worth our funders. KFF maintains full editorial management over all of its coverage evaluation, polling, and journalism actions.

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