There are 49.4 million Medicare beneficiaries in the U.S., and that number is growing at a breakneck pace as the baby boomer population ages. Medication costs represent 12.2% of Medicare spending, with 81.3% of current Medicare beneficiaries using a Medicare Part D plan such as the Express Scripts Medicare Prescription Drug Plan to cover the cost of their medications.
To ease the burden of prescription-drug spending, it’s important to understand the trends so we can identify opportunities to improve outcomes and reduce waste.
Medicare Drug Spending Climbs Slower Than Commercial Drug Spending
According to the Express Scripts 2012 Drug Trend Report, Medicare drug spending increased 2.5%, just slightly lower than the commercially insured population.
A few key insights:
Diabetes was the top-ranked therapy class for traditional trend, driven by increased costs from new medications – i.e., Tradjenta® (linagliptin) – and insulin drugs. Utilization remains high, outpaced only by ulcer disease and depression.
Use of cancer medications increased 11.8%, contributing to an overall spending increase of 32.8% for this population. New medications – Afinitor® (everolimus) and Zelboraf® (vemurafenib) – and increased use of Avastin® (bevacizumab) and fluorouracil for off-label use to treat macular degeneration and actinic keratoses (sun spots) are driving the increases.
Hepatitis C was by far the largest influencer of spending increases, with a 63.5% increase in utilization and a 46.9% increase in unit costs, resulting in a triple-digit total trend for the class. Infection rates for the virus are more prevalent among patients born between 1945 and 1965, and new hepatitis C drugs – Incivek® (telaprevir) and Victrelis® (boceprevir) – are driving utilization and cost because newer therapies have a better adverse event profile for older patients.
Lastly, use of pain medications increased 4.1% in 2012 compared to 2011. While a decrease in unit costs kept overall spending for this category relatively flat due to generic availability of many medications, recent data suggests that growth in pain medication prescriptions for elderly patients has outpaced that of other age groups, in part due to pharmaceutical manufacturer influence on doctors and pain advocacy groups.
Prescribing Habits: Location, Location, Location
Q4 unit cost increases for the Medicare population was lower than annual unit cost increases for both traditional and specialty medications, but Q4 utilization was higher, suggesting that unit cost increases came earlier in the year, while utilization increases came at the end. This pattern may reflect increased availability of lower-cost generic drugs as the wave of patent expirations for blockbuster drugs continued throughout 2012.
This prompted us to look closer at prescribing patterns for generics in this population, and we discovered the following:
Younger healthcare providers – physicians, nurse practitioners and physician assistants – are more likely to prescribe generic medications to Medicare patients.
Prescribers who care for a large number of Medicare patients are more likely to prescribe generics, and this behavior carries over to commercially insured beneficiaries.
Most notably, providers in Midwestern states such as Ohio, Illinois and Michigan prescribe generics more often. Prescribers in New York, New Jersey and southern states had lower generic fill rates.
Generic Fill Rate for Medicare by State
The positive impact of generics is reflected in how modest the overall spending increases are. However, there still is tremendous potential for savings for both Medicare beneficiaries and plan sponsors by increasing generic use.
Medicare benefit plan management that favors generic drugs – such as formulary management and home-delivery programs – have the potential to enable better health outcomes while saving money for patients and plan sponsors. And our findings regarding the geographic variation in prescribing patterns suggest that attempts to increase the rate at which physicians prescribe generic alternatives will likely require different interactions and interventions and that the success of these kinds of efforts may vary by region.
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