UPDATED: New Kaiser analysis shows how limiting price negotiations to targeted drugs may better focus upcoming legislation
As Congress considers whether to adopt sweeping new legislation to lower prescription drug prices across the board, the Kaiser Family Foundation is out with a new report on Monday showing how a more targeted approach on a subset of drugs might be a more efficient way to save government funds.
“This analysis shows that Medicare Part D and Part B spending is highly concentrated among a relatively small share of covered drugs, mainly those without generic or biosimilar competitors,” wrote Juliette Cubanski, deputy director of the program on Medicare policy at KFF, and Tricia Neuman, SVP of KFF. “Focusing drug price negotiation or reference pricing on a subset of drugs that account for a disproportionate share of spending would be an efficient use of administrative resources, though it would also leave some potential savings on the table.”
The report found that in 2019, 60% of net total Part D spending came from 250 top-selling drugs in Medicare’s Part D program with one manufacturer and no generic or biosimilar competition, which was 7% of all Part D covered drugs.
“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 analysis shows.
In addition, the top 50 drugs covered under Medicare Part B, representing just 8.5% of all Part B covered drugs, accounted for 80% of total spending in the program.
“In considering whether to broaden these proposals to focus on all prescription drugs, policymakers may want to consider whether doing so would achieve sufficient savings to justify the added administrative burden and associated costs,” Cubanski and Neuman wrote.
Democrats are hoping to use savings from major drug pricing reforms to help pay for an infrastructure bill later this year, rather than try to work through standalone pricing legislation, which would require 60 votes in the Senate.
“I would look for legislation coming out of the Senate to be more along the lines of what Senator Wyden proposed with Senator Grassley in 2019, which was more modest if only in that it didn’t include the negotiation provision in HR 3,” Cubanski told Endpoints.