Health

KFF: Small number of Medicare Part D, Part B drugs make up most spending

A relatively small share of drugs made up the majority of Medicare drug spending, according to a new analysis that gives an idea of how drug price negotiations could impact overall spending.

The analysis, released Monday from the Kaiser Family Foundation, examined the top drugs for both Medicare Part D and Part B. The costliest drugs treat cancer, diabetes and rheumatoid arthritis, among other ailments.

KFF found that 250 top-selling drugs in Part D with one manufacturer and no competition from a generic or biosimilar accounted for 60% of all total Part D spending in 2019. Those drugs made up only 7% of all covered products in Part D, which covers more than 3,500 products and spent $183 billion in 2019 when not accounting for rebates.

The top 10 selling drugs included “three cancer medications, four diabetes medications, two anticoagulants and one rheumatoid arthritis treatment,” the analysis said. “Our estimate of net total spending on each of these drugs ranged from around $1 billion to $4 billion in 2019.”

In Medicare Part B, which covered fewer than 600 drugs in 2019, spending is also concentrated among a handful of medications.

RELATED: CMS nixes proposed Part D protected drug class changes made by Trump admin

The top-selling drug in Part B—which covers primarily outpatient drugs and pays for services such as doctors—was Eylea, which treats macular degeneration. The drug made up $2.9 billion in spending in 2019.

For Part D, the top-selling drug was cancer treatment Revlimid, and the second was blood clot medication Eliquis.

The analysis, based on data from the Centers for Medicare & Medicaid Services’ Part B and Part D drug spending dashboards, comes as Congress is discussing the next steps on how to tackle drug price reform.

Several Democrats in the House and Senate introduced legislation back in March to give Medicare the power to negotiate with drug companies to lower prices for pharmaceuticals covered under Part D. Similar legislation passed the House in 2019 but was never taken up by the GOP-controlled Senate.

The Trump administration also issued a final rule that creates a demonstration model that aims to peg prices for the top 50 drugs paid by Part B to the lowest prices paid by several countries overseas.

However, the rule has not gone into effect yet and has been challenged in court by the pharmaceutical lobby.

KFF said the 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.”

The analysis said focusing negotiation or referencing pricing on a certain subset of drugs could leave some potential savings on the table.

Policymakers may want to consider the drawbacks to focusing pricing proposals on all drugs and whether “doing so would achieve sufficient savings to justify the added administrative burden and associated costs,” KFF said.

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