Decomposition Analysis of Spending and Price Trends for Biologic Anti-Rheumatic Drugs in Medicare and Medicaid.

OBJECTIVE: Billions of public dollars are spent each year on biologic disease-modifying anti-rheumatic drugs (bDMARDs), but the drivers of recent increases in bDMARD spending are unclear. We characterized changes in total spending and unit-prices for bDMARDs in Medicare and Medicaid and quantified the major sources of these spending increases.

METHODS: We accessed drug spending data for years 2012-2016, covering all Medicare Part B (fee-for-service), Part D, and Medicaid enrollees. After calculating five-year changes in total spending and unit-prices for each bDMARD and in-aggregate, we performed standard decomposition analyses to isolate four sources of spending growth: drug prices, uptake [# recipients], treatment intensity [mean # doses/claim], and treatment duration [annual # claims/recipient]), both excluding and including time-varying rebates.

RESULTS: From 2012-2016, annual spending on public-payer claims for the 10 included bDMARDs more than doubled ($3.8 to $8.6 billion), with median drug price increases of 51% in Part D (mean 54%) and 8% within Part B (mean 21%). Adjusting for general inflation, unit-price increases alone accounted for 57% of the five-year, $3.0 billion spending increase within Part D; 37% was from increased uptake. Accounting for time-varying rebates, prices were still responsible for 54% of increased spending. Unit-prices and spending were lower under Medicaid than Part D, but temporal trends and contributors were similar.

CONCLUSION: Post-market drug-price changes alone account for the majority of recent spending growth for bDMARDs. Policy interventions targeting price increases, particularly under Part D plans, may help mitigate drug financial burdens for public payers and bDMARD recipients.