Coverage of New Drugs in Medicare Part D.

Policy Points Only a small minority of new drugs in "nonprotected" classes are widely covered by Part D plans nationwide in the year after US Food and Drug Administration (FDA) approval. Part D plans frequently apply utilization management restrictions such as prior authorizations to newly approved drugs in both protected and nonprotected classes. Drug price influences both formulary inclusion (in nonprotected classes) and coverage restrictions (in both protected and nonprotected classes), while other drug characteristics such as therapeutic benefits are not consistently associated with formulary design. Plans do not seem to favor the minority of drugs that are determined to offer added therapeutic benefit over existing alternatives. CONTEXT: Medicare Part D is an outpatient prescription drug benefit for older Americans covering more than 46 million beneficiaries. Except for mandatory coverage for essentially all drugs in six protected classes, plans have substantial flexibility in how they design their formularies: which drugs are covered, which drugs are subject to restrictions, and what factors determine formulary placement. Our objective in this paper was to document the extent to which Part D plans limit coverage of newly approved drugs. METHODS: We examined the formulary design of 4,582 Part D plans from 2014 through 2018 and measured (1) the decision to cover newly approved drugs in nonprotected classes, (2) use of utilization management tools in protected and nonprotected classes, and (3) the association between plan design and drug-level characteristics such as 30-day cost, therapeutic benefit, and the US Food and Drug Administration (FDA) expedited regulatory pathway. FINDINGS: The FDA approved 109 new drugs predominantly used in outpatient settings between 2013 and 2017. Of these, 75 fell outside of the six protected drug classes. One-fifth of drugs in nonprotected classes (15 out of 75) were covered by more than half of plans during the first year after approval. Coverage was often conditional on utilization management strategies in both protected and nonprotected classes: only seven drugs (6%) were covered without prior authorization requirements in more than half of plans. Higher 30-day drug costs were associated with more widespread coverage in nonprotected classes: drugs that cost less than $150 for a 30-day course were covered by fewer than 20% of plans while those that cost more than $30,000 per 30 days were covered by more than 50% of plans. Plans were also more likely to implement utilization management tools on high-cost drugs in both protected and nonprotected classes. A higher proportion of plans implemented utilization management strategies on covered drugs with first-in-class status than drugs that were not first in class. Other drug characteristics, including availability of added therapeutic benefit and inclusion in FDA expedited regulatory approval, were not consistently associated with plan coverage or formulary restrictions. CONCLUSIONS: Newly approved drugs are frequently subject to formulary exclusions and restrictions in Medicare Part D. Ensuring that formulary design in Part D is linked closely to the therapeutic value of newly approved drugs would improve patients' welfare.

The Contribution of Price Growth to Pharmaceutical Revenue Growth in the United States: Evidence from Medicines Sold in Retail Pharmacies.

CONTEXT: To what extent does pharmaceutical revenue growth depend on new medicines versus increasing prices for existing medicines? Moreover, does using list prices, as is commonly done, instead of prices net of confidential rebates offered by manufacturers, which are harder to observe, change the relative importance of the sources of revenue growth? METHODS: This study uses data from SSR Health LLC to address these research questions using decomposition methods that analyze list prices, prices net of rebates, and sales for branded pharmaceutical products sold primarily through retail pharmacies. FINDINGS: From 2009 to 2019, retail pharmaceutical revenue growth was primarily driven by new products rather than by price increases on existing products. Failing to account for confidential rebates creates a more prominent role for price increases in explaining revenue growth, because list price inflation during this period was 10.9%, whereas net price inflation was 3.3%. CONCLUSIONS: Policies that restrict price growth on existing medicines likely need to be coupled with policies that reduce launch prices to have a meaningful long-term impact on pharmaceutical revenue growth. Using pharmaceutical list prices is often an inadequate approximation for net prices because the role of rebates has increased and varies by drug class.

Evaluating Matching-Adjusted Indirect Comparisons in Practice: A Case Study of Patients with Attention-Deficit/Hyperactivity Disorder.

Differences in patient characteristics across trials may bias efficacy estimates from indirect treatment comparisons. To address this issue, matching-adjusted indirect comparison (MAIC) measures treatment efficacy after weighting individual patient data to match patient characteristics across trials. To date, however, there is no consensus on how best to implement MAIC. To address this issue, we applied MAIC to measure how two attention-deficit/hyperactivity disorder (ADHD) treatments (guanfacine extended release and atomoxetine hydrochloride) affect patients' ADHD symptoms, as measured by the ADHD Rating Scale IV score. We tested MAIC sensitivity to: matched patient characteristics, matched statistical moments, weighting matrix, and placebo-arm matching (i.e., matching on outcomes in the placebo arm). After applying MAIC, guanfacine and atomoxetine had similar reductions in ADHD symptoms (Δ: 0.4, p < 0.737). The results were similar for three of four sensitivity analyses. When we applied MAIC with placebo-arm matching, however, guanfacine reduced symptoms more than atomoxetine (Δ: -3.9, p < 0.004). We discuss the implication of this finding and advise MAIC practitioners to carefully consider the use of placebo-arm matching, depending on the presence of residual confounding across trials. Copyright © 2016 John Wiley & Sons, Ltd.

Comparison of self-reported and Medicare claims-identified acute myocardial infarction.

BACKGROUND: Cardiovascular disease is often studied through patient self-report and administrative data. However, these 2 sources provide different information, and few studies have compared them. METHODS AND RESULTS: We compared data from a longitudinal, nationally representative survey of older Americans with matched Medicare claims. Self-reported heart attack in the previous 2 years was compared with claims-identified acute myocardial infarction (AMI) and acute coronary syndrome. Among the 3.1% of respondents with self-reported heart attack, 32.8% had claims-identified AMI, 16.5% had non-AMI acute coronary syndrome, and 25.8% had other cardiac claims; 17.3% had no inpatient visits in the previous 2.5 years. Claims-identified AMIs were found in 1.4% of respondents; of these, 67.8% reported a heart attack. Self-reports were less likely among respondents >75 years of age (62.7% versus 74.6%; P=0.006), with less than high school education (61.6% versus 71.4%; P=0.015), with at least 1 limitation in activities of daily living (59.6% versus 74.7%; P=0.001), or below the 25th percentile of a word recall memory test (60.7% versus 71.3%; P=0.019). Both self-reported and claims-identified cardiac events were associated with increased mortality; the highest mortality was observed among those with claims-identified AMI who did not self-report (odds ratio, 2.8; 95% confidence interval, 1.5-5.1) and among those with self-reported heart attack and claims-identified AMI (odds ratio, 2.5; 95% confidence interval, 1.7-3.6) or non-AMI acute coronary syndrome (odds ratio, 2.7; 95% confidence interval, 1.8-4.1). CONCLUSIONS: There is considerable disagreement between self-reported and claims-identified events. Although self-reported heart attack may be inaccurate, it indicates increased risk of death, regardless of whether the self-report is confirmed by Medicare claims.

Health Care Exceptionalism? Performance and Allocation in the US Health Care Sector.

The conventional wisdom for the healthcare sector is that idiosyncratic features leave little scope for market forces to allocate consumers to higher performance producers. However, we find robust evidence - across several different conditions and performance measures - that higher quality hospitals have higher market shares and grow more over time. The relationship between performance and allocation is stronger among patients who have greater scope for hospital choice, suggesting that patient demand plays an important role in allocation. Our findings suggest that healthcare may have more in common with "traditional" sectors subject to market forces than often assumed.

Malpractice risk according to physician specialty.

BACKGROUND: Data are lacking on the proportion of physicians who face malpractice claims in a year, the size of those claims, and the cumulative career malpractice risk according to specialty. METHODS: We analyzed malpractice data from 1991 through 2005 for all physicians who were covered by a large professional liability insurer with a nationwide client base (40,916 physicians and 233,738 physician-years of coverage). For 25 specialties, we reported the proportion of physicians who had malpractice claims in a year, the proportion of claims leading to an indemnity payment (compensation paid to a plaintiff), and the size of indemnity payments. We estimated the cumulative risk of ever being sued among physicians in high- and low-risk specialties. RESULTS: Each year during the study period, 7.4% of all physicians had a malpractice claim, with 1.6% having a claim leading to a payment (i.e., 78% of all claims did not result in payments to claimants). The proportion of physicians facing a claim each year ranged from 19.1% in neurosurgery, 18.9% in thoracic-cardiovascular surgery, and 15.3% in general surgery to 5.2% in family medicine, 3.1% in pediatrics, and 2.6% in psychiatry. The mean indemnity payment was $274,887, and the median was $111,749. Mean payments ranged from $117,832 for dermatology to $520,923 for pediatrics. It was estimated that by the age of 65 years, 75% of physicians in low-risk specialties had faced a malpractice claim, as compared with 99% of physicians in high-risk specialties. CONCLUSIONS: There is substantial variation in the likelihood of malpractice suits and the size of indemnity payments across specialties. The cumulative risk of facing a malpractice claim is high in all specialties, although most claims do not lead to payments to plaintiffs. (Funded by the RAND Institute for Civil Justice and the National Institute on Aging.).

Medical professional liability risk among US cardiologists.

BACKGROUND: Medical professional liability (MPL) remains a significant burden for physicians, in general, and cardiologists, in particular, as recent research has shown that average MPL defense costs are higher in cardiology than other specialties. Knowledge of the clinical characteristics and outcomes of lawsuits against cardiologists may improve quality of care and risk management. METHODS: We analyzed closed MPL claims of 40,916 physicians and 781 cardiologists insured by a large nationwide insurer for ≥1 policy year between 1991 and 2005. RESULTS: The annual percentage of cardiologists facing an MPL claim was 8.6%, compared with 7.4% among physicians overall (P < .01). Among 530 claims, 72 (13.6%) resulted in an indemnity payment, with a median size of $164,988. Mean defense costs for claims resulting in payment were $83,593 (standard deviation (s.d.) $72,901). The time required to close MPL claims was longer for claims with indemnity payment than claims without (29.6 versus 18.9 months; P < .001). More than half of all claims involved a patient's death (304; 57.4%), were based on inpatient care (379; 71.5%), or involved a primary cardiovascular condition (416; 78.4%). Acute coronary syndrome was the most frequent condition (234; 44.2%). Medical professional liability claims involving noncardiovascular conditions were common (66; 12.5%) and included falls or mechanical injuries had while under a cardiologist's care and a failure to diagnose cancer. CONCLUSIONS: Rates of malpractice lawsuits are higher among cardiologists than physicians overall. A substantial portion of claims are noncardiovascular in nature.

Medicare price negotiation and pharmaceutical innovation following the Inflation Reduction Act.

The Inflation Reduction Act (IRA) requires Medicare to negotiate lower prices for some medicines with high Medicare spending. Using historical data from public and proprietary sources to apply the IRA's negotiation criteria retrospectively, we identify all drugs that met the eligibility criteria from 2012 to 2021 to classify drugs that would have had a negotiated price in effect in 2022 and to calculate associated decreases in industry revenues. Our results suggest that the IRA's reduction in overall industry revenue will be modest, will not affect most top-selling drugs and will not likely result in large-scale defunding of research and development. Changes in the net present value of drug-development projects will be concentrated in medicines where Medicare is a notable purchaser and where the ratio between expected revenue and development costs was only marginally positive before the IRA. Policymakers considering narrowing or expanding the scope of Medicare negotiation should carefully consider the tradeoffs across medicines with diverse characteristics.