For the top 250 drugs, the average net cost per claim was $5,750, more than twice as much as the average net cost per claim for the remaining 2,208 drugs with one manufacturer ($2,555), and more than 13 times greater than the average net cost per claim for all other covered Part D drugs ($422) (primarily generic drugs).
The average net cost per claim across the top 250 drugs with one manufacturer and no generic or biosimilar competitors was substantially higher than the average net cost per claim of other covered Part D drugs.In contrast, the remaining 2,208 drugs with one manufacturer accounted for 13% of net total Part D spending in 2019, and all other covered Part D drugs (1,078) accounted for 27% of net total spending.
The top-selling 250 drugs with one manufacturer and no generic or biosimilar competitors accounted for 60% of net total Part D spending in 2019 (Figure 1).Our analysis shows that Part D drug spending is concentrated among a relatively small number of drugs with only one manufacturer and no generic or biosimilar competition. We assumed no rebate for lower-cost generic drugs. For specialty drugs (which we identified as drugs with prices at or above $670 per claim, based on the amount of the Part D specialty tier threshold ]in 2019), we applied a rebate of 12%, and for non-specialty brand-name drugs, we applied a rebate of 47%. Because drug-specific rebate data are not publicly available, we applied average rebates from a CBO analysis of prices for top-selling brand-name drugs to derive an estimate of net Medicare Part D spending of $145 billion in 2019. In 2019, Medicare Part D covered more than 3,500 prescription drug products, with total spending of $183 billion, not accounting for rebates. The top 50 drugs covered under Medicare Part B (8.5% of all Part B covered drugs) accounted for 80% of total Part B drug spending.įigure 1: A Relatively Small Number of Prescription Drugs Accounts for a Large Share of Medicare Part D and Part B Drug Spending Medicare Part D.The 250 top-selling drugs in Medicare Part D with one manufacturer and no generic or biosimilar competition (7% of all Part D covered drugs) accounted for 60% of net total Part D spending.Our analysis finds that a relatively small number and share of drugs accounted for a disproportionate share of Medicare Part B and Part D prescription drug spending in 2019 (Figure 1). (See Data and Methods for details.) Takeaways For Part D, we calculated estimates of net total spending, taking into account average rebates reported by the Congressional Budget Office. For this analyses, we ranked drugs by total spending in 2019, based on data from the Centers for Medicare & Medicaid Services’ Medicare Part D and Part B drug spending dashboards. This analysis provides context for this question by measuring the share of total Medicare Part D and Part B drug spending accounted for by top-selling drugs covered under each part. These drug pricing proposals raise the question of whether limiting the number of drugs subject to government price negotiation or international reference pricing might leave substantial savings on the table, even if this approach is more administratively feasible than subjecting all drugs to negotiation or reference pricing. (In light of pending litigation, the Biden Administration has stated that it will not implement this model without further rulemaking.)
In a similar vein, the Trump administration issued a final rule to establish a model through the CMS Innovation Center that would base Medicare’s payment for the 50 highest-spending Part B drugs (i.e., drugs administered by physicians in outpatient settings) on the lowest price paid by certain other similar countries. In contrast, other drug price negotiation proposals placed no limit on the number of covered drugs subject to negotiation. 3, the HHS Secretary would negotiate prices for up to 250 brand-name drugs lacking generic or biosimilar competition with the highest net spending. 3) to allow the federal government to negotiate drug prices for Medicare Part D, Medicare’s outpatient prescription drug benefit, and private insurers. During the previous session of Congress, the House passed legislation (H.R. Policymakers are once again focusing attention on proposals to lower prescription drug costs.
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