Cheaper is not always better: Drug shortages in the United States and a value-based solution to alleviate them.

Drug shortages threaten patients' access to medications and are associated with adverse health outcomes and increased costs. Drug shortages disproportionately occur among generic drugs of limited profitability, most notably drugs administered by injection. In this perspective, we discuss how reimbursement and purchasing practices that were meant to create an efficient marketplace for generics have generated strong price pressure that threatens profitability in certain markets. We further explain how, faced with limited profitability, manufacturers lack incentives to invest in resilient supply chains, and in some cases, engage in cost-containment strategies or decide to exit the market, ultimately contributing to shortages. We propose the development and implementation of value-based reimbursement to provide needed incentives for drug purchasers and manufacturers to establish a more reliable supply chain as part of the policy solution to reduce the number and extent of drug shortages. This reimbursement model would necessitate the development of a rating system that measures supply chain resilience and maturity for each generic product. This rating would then be applied as a value-based modifier to reimbursement rates for generic products. The proposed model would result in higher reimbursement rates for generic products from more dependable supply chains, generating incentives for manufacturers to invest in supply chain resiliency. We propose the application of this reimbursement system originally in Medicare given Congressional interest on reforming Medicare payment to prevent drug shortages.

Price benchmarks of drugs selected for Medicare price negotiation and their therapeutic alternatives.

BACKGROUND: The Centers for Medicare and Medicaid Services (CMS) are currently negotiating prices with pharmaceutical manufacturers for the first 10 Part D drugs selected for Medicare drug price negotiation. Non-publicly available data, including the net prices of selected drugs and their therapeutic alternatives, will play a central role in the determination of the maximum fair prices (MFPs). OBJECTIVE: To estimate price benchmarks involved in the derivation of the starting point of the CMS initial price offer for the 10 drugs selected for Medicare price negotiation. METHODS: For the 10 drugs selected for negotiation, we reported (1) the list price, (2) the net price after manufacturer discounts, (3) the maximum negotiated price based on the minimum statutory discount, and (4) the ceiling of the MFP, estimated as the lowest of the latter 2. We also estimated net prices for therapeutic alternatives to the selected drugs. Net prices were estimated using peer-reviewed methodology that isolates commercial discounts negotiated between payers and manufacturers from mandatory discounts under government programs. All price benchmarks were estimated at the product level, for 30-day equivalent dosing, using 2021 data. RESULTS: 6 products (apixaban, rivaroxaban, empagliflozin, sacubitril/valsartan, etanercept, and insulin aspart) had therapeutic alternatives with lower net prices, which will be integrated with clinical benefit data in the derivation of initial price offers. The other 4 products (ustekinumab, ibrutinib, sitagliptin, and dapagliflozin) had therapeutic alternatives with higher net prices than the drugs selected for negotiation. For ibrutinib and ustekinumab, prices based on the minimum discounts were considerably lower than the estimated net prices and will likely set the starting point of the initial price offer. For dapagliflozin and sitagliptin, the starting point of the initial price offer will likely resemble their existing net prices. CONCLUSIONS: Our analyses identify different negotiation scenarios for the first 10 drugs selected for Medicare price negotiation, based on key elements involved in the derivation of the initial price offer. Our analyses can help improve transparency in the negotiation process, because the CMS is not required to reveal the information used in the derivation of price offers.

Advancing Access to Cell and Gene Therapies in Medicaid.

This Viewpoint presents the components of the payment model and the implementation challenges among the Center for Medicare and Medicaid Innovation, state Medicaid agencies, patients, and manufacturers.

Effects of the valsartan recall on heart failure patients: A nationwide analysis.

BACKGROUND: Valsartan is commonly used for cardiac conditions. In 2018, the Food and Drug Administration recalled generic valsartan due to the detection of impurities. Our objective was to determine if heart failure patients receiving valsartan at the recall date had a greater likelihood of unfavorable outcomes than patients using comparable antihypertensives. METHODS: We conducted a cohort study of Optum's de-identified Clinformatics® Datamart (July 2017-January 2019). Heart failure patients with commercial or Medicare Advantage insurance who received valsartan were compared to persons who received non-recalled angiotensin receptor blockers (ARBs) and angiotensin converting enzyme-inhibitors (ACE-Is) for 1 year prior and including the recall date. Outcomes included a composite for all-cause hospitalization, emergency department (ED), and urgent care (UC) use and a measure of cardiac events which included hospitalizations for acute myocardial infarction and hospitalizations/ED/UC visits for stroke/transient ischemic attack, heart failure or hypertension at 6-months post-recall. Cox proportional hazard models with propensity score weighting compared the risk of outcomes between groups. RESULTS: Of the 87 130 adherent patients, 15% were valsartan users and 85% were users of non-recalled ARBs/ACE-Is. Valsartan use was not associated with an increased risk of all-cause hospitalization/ED/UC use six-months post-recall (HR 1.00; 95% CI 0.96-1.03), compared with individuals taking non-recalled ARBs/ACE-Is. Similarly, cardiac events 6-months post-recall did not differ between individuals on valsartan and non-recalled ARBs/ACE-Is (HR 1.04; 95% CI 0.97-1.12). CONCLUSIONS: The valsartan recall did not affect short-term outcomes of heart failure patients. However, the recall potentially disrupted the medication regimens of patients, possibly straining the healthcare system.

Net prices of new antiobesity medications.

OBJECTIVE: Glucagon-like peptide-1 receptor agonists (GLP1s) are effective antiobesity drugs and the subject of intense debate around insurance coverage due to the large prevalence of obesity and overweight. The estimation of the budget impact associated with GLP1 insurance coverage requires estimates of GLP1 prices that account for manufacturer discounts. The authors applied a peer-reviewed method to estimate the net prices of GLP1s after manufacturer discounts. METHODS: The authors estimated manufacturer discounts for each product as the difference between the gross sales estimated at list price and manufacturer-reported revenue. From this difference, the authors subtracted discounts to government programs, including 340B, Medicaid, and the Medicare Part D coverage gap, and attributed the remaining amount to manufacturer discounts provided in the commercial market. RESULTS: Manufacturer discounts for GLP1s approved for obesity were estimated at 41%, which translated into net prices of $717 to $761 per month of supply. Manufacturer discounts for GLP1s approved for type 2 diabetes ranged from 54% to 59%, which translated into net prices of $312 to $469 per month of supply. CONCLUSIONS: The magnitude of manufacturer discounts underscores the need to consider net price information in studies that inform private and public payers' decision-making around coverage of GLP1s for obesity.

Medicare Part D Coverage of Anti-obesity Medications: a Call for Forward-Looking Policy Reform.

When the Medicare Part D benefit was constructed, drugs for weight loss were explicitly excluded from coverage, as the limited effectiveness and unfavorable safety profile of medications available at the time failed to justify coverage of drugs perceived to be used for cosmetic purposes. In recent years, drugs activating the glucagon-like peptide-1 receptor (GLP-1R) pathway have proved to achieve significant reductions in body weight with a favorable safety profile. The effectiveness of GLP-1R agonists in reducing weight and improving the metabolic profile warrants the reconsideration of the historical exclusion of weight loss drugs from Part D coverage. In this perspective, we outline policy options to enable Part D coverage of GLP-1R agonists. These include legislative change through the passage of the Treat and Reduce Obesity Act and evaluation of coverage policies under the waiver authority of the Center for Medicare and Medicaid Innovation.

Medicare drug price negotiation: The complexities of selecting therapeutic alternatives for estimating comparative effectiveness.

Under the 2022 Inflation Reduction Act, the Centers for Medicare and Medicaid Services (CMS) are able to negotiate prices for topselling drugs in the Medicare Part B and D programs. In determining initial price offers, CMS will compare the prices and clinical benefits of the drugs subject to negotiation to the prices and clinical benefits of therapeutic alternatives. Despite the central role that the selection of therapeutic alternatives will play in the price negotiations, the available guidance published by CMS provides few details about how the organization will undertake this process, which will be particularly complex for drugs approved for more than one indication. To better inform the selection process, we identified all US Food and Drug Administration-approved indications for the first 10 drugs subject to negotiation. Using 2020-2021 Medicare claims data, we identified Medicare Part D beneficiaries using each of the 10 drugs. We extracted medical claims with diagnosis codes for each of the approved indications to report the relative treated prevalence of use by indication for each drug. We reviewed published clinical guidelines to identify relevant therapeutic alternatives for each of the indications. We integrated the evidence on the relative treated prevalence of indications and clinical guidelines to propose therapeutic alternatives for each of the 10 drugs. We describe challenges that CMS may face in selecting therapeutic alternatives.

A primer on brand-name prescription drug reimbursement in the United States.

Branded prescription drug reimbursement in the United States is complex and comprises multiple transactions among the parties involved in the drug supply chain, including manufacturers, wholesalers, pharmacies, health care providers, health plans or insurers, pharmacy benefit managers, and patients. This primer provides an overview of the parties involved in the reimbursement of brand-name drugs under both the pharmacy and medical benefits of an insurance policy and the flow of products and payments among them. Prescription drug spending in the United States grew from $30 billion in 1980 to $335 billion in 2018, and 80% of spending is on brand-name drugs.1,2 Pharmaceutical spending and drug prices have been the focus of intense debate in recent years, which has brought attention to the complexity of the drug supply chain. This primer provides a high-level overview of the distribution and reimbursement of brand-name drugs (italicized words are defined in the Glossary) used in the outpatient setting and covered by health plans or insurers in the United States. The focus is on the parties involved and the flow of products and payments among them. The purchase of drug products outside of insurance and differences in drug reimbursement between private and public insurers are outside of the scope of this primer.

Reimbursement to Pharmacies for Generic Drugs by Medicare Part D Sponsors.

This study evaluates whether organizations that offer Medicare Part D plans (referred to as Part D sponsors) overpay pharmacies for generic drugs.

Trends in Proportion of Medicare Part D Claims Subject to 340B Discounts, 2013-2020.

Importance: Despite controversy surrounding the 340B program, no study has analyzed trends in the proportion of Medicare Part D pharmacy claims eligible for 340B discounts. Objective: To describe trends in the proportion of Medicare Part D claims that are prescribed by 340B-affiliated clinicians and filled in 340B pharmacies. Design and Setting: This longitudinal, retrospective cohort study included 2013 to 2020 claims data from a 5% random sample of Medicare Part D beneficiaries from the Centers for Medicare & Medicaid Services and 6292 nine-digit national drug codes that were used by at least 1000 Part D beneficiaries in a given year. Data analysis was completed from November 2022 to April 2023. Main Outcomes and Measures: For each drug and year, there were 3 outcomes: (1) proportion of total Part D claims that were prescribed by a 340B-affiliated clinician; (2) proportion of claims prescribed by a 340B-affiliated clinician that were filled in a 340B pharmacy; and (3) proportion of total Part D claims under the 340B program (ie, prescribed by a 340B-affiliated clinician and filled in a 340B pharmacy). Results: The proportion of prescriptions written by a 340B-affiliated clinician doubled from 9.4% in 2013 to 19.3% in 2020. The capture of 340B prescriptions by 340B pharmacies, defined as the proportion of claims prescribed by 340B-affiliated clinicians that were filled by 340B pharmacies, increased from 18.4% in 2013 to 49.9% in 2020. As a result, the total proportion of 340B claims in Part D increased from 1.7% in 2013 to 9.6% in 2020. Rates of 340B prescribing and capture increased consistently across therapeutic classes. In 2020, the antiviral therapeutic class was the class with the largest proportion of 340B claims (16.1%), followed by targeted antineoplastics (15.7%). Conclusions and Relevance: This cohort study demonstrated that from 2013 to 2020, the share of Medicare Part D claims prescribed by a 340B-affiliated clinician increased; however, the rate at which 340B-eligible prescriptions were filled at 340B pharmacies increased at a faster rate, driving the overall increase in 340B claims. Despite these trends, only half of 340B-eligible prescriptions were subject to the 340B discount in 2020.

Nonfederal average manufacturer price to estimate savings generated by minimum discounts under the Inflation Reduction Act.

DISCLOSURES: This work was funded by the West Health Policy Center. Dr Hernandez reports consulting fees from Pfizer and BMS, outside of the submitted work. Following the submission of the original manuscript, Dr Dickson became an employee of AHIP. AHIP has had no role in reviewing this letter. The statements, findings, conclusions, views, and opinions contained and expressed herein are not necessarily those of IQVIA Inc. or any of its affiliated or subsidiary entities.

Individual and social determinants of adherence to sodium-glucose cotransporter 2 inhibitor therapy: A trajectory analysis.

BACKGROUND: Sodium-glucose cotransporter 2 inhibitors (SGLT2is) are known to improve cardiovascular and renal outcomes in patients with type 2 diabetes (T2D). Understanding the longitudinal patterns of adherence and the associated predictors is critical to addressing the suboptimal use of this outcome-improving treatment. OBJECTIVE: To characterize the distinct trajectories of adherence to SGLT2is in patients with T2D and to identify patient characteristics and social determinants of health (SDOHs) associated with SGLT2i adherence. METHODS: In this retrospective cohort study, we identified patients with T2D who initiated and filled at least 1 SGLT2i prescription according to 2012-2016 national Medicare claims data. The monthly proportion of days covered with SGLT2is for each patient was incorporated into group-based trajectory models to identify groups with similar adherence patterns. A multinomial logistic regression model was constructed to examine the association between patient characteristics and group membership. In addition, the association between context-specific SDOHs (eg, neighborhood median income and neighborhood employment rate) and adherence to an SGLT2i regimen was explored in both the overall cohort and the racial and ethnic subgroups. RESULTS: The final sample comprised 6,719 patients with T2D. Four trajectories of SGLT2i adherence were identified: continuously adherent users (49.6%), early discontinuers (27.5%), late discontinuers (14.5%), and intermediately adherent users (8.4%). Patient age, sex, race, diabetes duration, and Medicaid eligibility were significantly associated with trajectory group membership. Areas with a higher unemployment rate, lower income level, lower high school education rate, worse nutrition environment, fewer health care facilities, and greater Area Deprivation Index scores were found to be associated with low adherence to SGLT2is. CONCLUSIONS: Four distinct trajectories of adherence to SGLT2is were identified, with only half of the patients remaining continuously adherent to their treatment regimen during the first year after initiation. Several contextual SDOHs were associated with suboptimal adherence to SGLT2is.

Changes In Net Prices And Spending For Pharmaceuticals After The Introduction Of New Therapeutic Competition, 2011-19.

Previous research has demonstrated that the introduction of a new brand-name pharmaceutical competitor does not lower list prices for existing competitive therapies. However, no study has systematically evaluated the impact of new therapeutic competition on net prices of pharmaceutical products. We identified new therapies approved during the period 2013-17 that were competitors for existing treatments. We used a novel peer-reviewed algorithm to estimate the net prices of existing therapies. We implemented regression models to estimate changes in these net prices after the approval of the new therapeutic competition during the period 2011-19. Across twelve therapeutic classes with new drug entrants in 2013-17, the introduction of new therapeutic competition was associated with a 4.2 percent decrease in annual net price growth. The introduction of new brand-name therapies in twelve therapeutic classes reduced net commercial spending on existing therapies by $10.4 billion-an 18.5 percent reduction in projected spending absent therapeutic competition. Our findings demonstrate that new therapeutic competition allows pharmacy benefit managers to use formulary management to decrease net prices and reduce drug spending, contrary to observed trends in list price increases.

Contextualizing the Price of Biosimilar Adalimumab Based on Historical Rebates for the Original Formulation of Branded Adalimumab.

This cross-sectional study compares recent list and net prices for Humira after rebates with announced prices of interchangeable biosimilar Humira formulations.

Estimated discounts generated by Medicare drug negotiation in 2026.

BACKGROUND: Starting in 2026, Medicare will be able to negotiate drug prices. Although recent reports have identified the drugs that will likely face negotiation, no study has estimated the maximum negotiated price according to guidance from the Centers for Medicare and Medicaid Services. OBJECTIVE: To identify the maximum negotiated price for the 10 drugs expected to be negotiated by Medicare in 2026. METHODS: We apply peer-reviewed methodology to estimate 2020 rebates for the 10 drugs anticipated to be negotiated by Medicare in 2026. We compare rebates to the statutory minimum discounts to identify the maximum negotiated price in 2026 and estimate savings. RESULTS: The minimum discount stipulated by the Inflation Reduction Act exceeds 2020 rebates for 4 of the 10 drugs expected to be negotiated in 2026, including etanercept, which is subject to a minimum discount of 60%, compared with an estimated rebate of 39.1%, and the cancer drugs ibrutinib, palbociclib, and enzalutamide, all of which will be subject to a minimum discount of 25%, compared with estimated rebates of 9%, 5.7% and 15.0%, respectively. Based on 2020 gross spending, the minimum required discount on these 4 drugs would generate savings of $1.8 billion. CONCLUSIONS: In 2026, minimum discounts will only apply to 4 of 10 drugs likely subject to negotiation. For most drugs, net prices will establish the ceiling for the negotiated price. To achieve the savings projected by the Congressional Budget Office ($3.7 billion), negotiated prices will have to fall below the ceiling for the negotiated price established by the statute. DISCLOSURES: This work was funded by the West Health Policy Center. Dr Hernandez reports consulting fees from Pfizer and Bristol Meyers Squibb, outside of the submitted work. Following the submission of this manuscript, Mr Dickson became an employee of American's Health Insurance Plans. American's Health Insurance Plans had no role in reviewing this manuscript. The statements, findings, conclusions, views, and opinions contained and expressed herein are not necessarily those of IQVIA Inc. or any of its affiliated or subsidiary entities.

Evaluation of Out-of-Pocket Costs and Treatment Intensification With an SGLT2 Inhibitor or GLP-1 RA in Patients With Type 2 Diabetes and Cardiovascular Disease.

Importance: The latest guidelines continue to recommend sodium-glucose cotransporter 2 (SGLT2) inhibitors and glucagon-like peptide-1 receptor agonists (GLP-1 RAs) for patients with type 2 diabetes (T2D) and established cardiovascular disease (CVD). Despite this, overall use of these 2 drug classes has been suboptimal. Objective: To assess the association of high out-of-pocket (OOP) costs and the initiation of an SGLT2 inhibitor or GLP-1 RA among adults with T2D and established CVD who are treated with metformin-treated. Design, Setting, and Participants: This retrospective cohort study used 2017 to 2021 data from the Optum deidentified Clinformatics Data Mart Database. Each individual in the cohort was categorized into quartiles of OOP costs for a 1-month supply of SGLT2 inhibitor and GLP-1 RA based on their health plan assignment. Data were analyzed from April 2021 to October 2022. Exposures: OOP cost for SGLT2 inhibitors and GLP-1 RA. Main Outcomes and Measures: The primary outcome was treatment intensification, defined as a new dispensing (ie, initiation) of either an SGLT2 inhibitor or GLP-1 RA, among patients with T2D previously treated with metformin monotherapy. For each drug class separately, Cox proportional hazards models were used to adjust for demographic, clinical, plan, clinician, and laboratory characteristics to estimate the hazard ratios of treatment intensification comparing the highest vs the lowest quartile of OOP costs. Results: Our cohort included 80 807 adult patients (mean [SD] age, 72 [9.5] years, 45 129 [55.8%] male; 71 128 [88%] were insured with Medicare Advantage) with T2D and established CVD on metformin monotherapy. Patients were followed for a median (IQR) of 1080 days (528 to 1337). The mean (SD) of OOP costs in the highest vs lowest quartile was $118 [32] vs $25 [12] for GLP-1 RA, and $91 [25] vs $23 [9] for SGLT2 inhibitors. Compared with patients in plans with the lowest quartile (Q1) of OOP costs, patients in plans with the highest quartile (Q4) of costs were less likely to initiate a GLP-1 RA (adjusted HR, 0.87 [95% CI, 0.78 to 0.97]) or an SGLT2 inhibitor (adjusted HR, 0.80 [95% CI, 0.73 to 0.88]). The median (IQR) number of days to initiating a GLP-1 RA was 481 (207-820) days in Q1 and 556 (237-917) days in Q4 of OOP costs and 520 (193-876) days in Q1 vs 685 (309-1017) days in Q4 for SGLT2 inhibitors. Conclusions and Relevance: In this cohort study of more than 80 000 older adults with T2D and established CVD covered by Medicare Advantage and commercial plans, those in the highest quartile of OOP cost were 13% and 20% less likely to initiate a GLP-1 RA or SGLT2 inhibitor, respectively, when compared with those in the lowest quartile of OOP costs.

Association between distance to community health care facilities and COVID-19-related mortality across U.S. counties in the COVID-19-vaccine era.

OBJECTIVE: COVID-19 has caused tremendous damage to U.S. public health, but COVID vaccines can effectively reduce the risk of COVID-19 infections and related mortality. Our study aimed to quantify the association between proximity to a community healthcare facility and COVID-19 related mortality after COVID vaccines became publicly available and explore how this association varied across racial and ethnic groups. RESULTS: Residents living farther from a facility had higher COVID-19-related mortality across U.S. counties. This increased mortality incidence associated with longer distances was particularly pronounced in counties with higher proportions of Black and Hispanic populations.

Assessment of Commercial and Mandatory Discounts in the Gross-to-Net Bubble for the Top Insulin Products From 2012 to 2019.

Importance: Insulin list prices have grown substantially since 2010, but net prices have declined since 2015 because of manufacturer discounts, leading to an increasingly large difference between list and net prices of drugs often called the gross-to-net bubble. It remains unclear to what extent the gross-to-net bubble represents voluntary manufacturer discounts negotiated in commercial and Medicare Part D markets (hereafter called commercial discounts) vs mandatory discounts under the Medicare Part D coverage gap, Medicaid, and the 340B program. Objective: To decompose the overall gross-to-net bubble of leading insulin products into discount types. Design, Setting, and Participants: This economic evaluation obtained data from Medicare and Medicaid claims and spending dashboards, Medicare Part D Prescriber Public Use File, and SSR Health for the top 4 commonly used insulin products: Lantus, Levemir, Humalog, and Novolog. The gross-to-net bubble, which represents total discounts, was estimated for each insulin product and year (from 2012 to 2019). Analyses were conducted in June to December 2022. Main Outcomes and Measures: The gross-to-net bubble was decomposed into 4 discount types: (1) Medicare Part D coverage gap discounts, (2) Medicaid discounts, (3) 340B discounts, and (4) commercial discounts. Coverage gap discounts were estimated using Medicare Part D claims data. Medicaid and 340B discounts were estimated using a novel algorithm that accounted for best prices set by commercial discounts. Results: Total discounts for the 4 insulin products increased from $4.9 billion to $22.0 billion. Commercial discounts represented a majority of all discounts, increasing from 71.7% of the gross-to-net bubble in 2012 ($3.5 billion) to 74.3% ($16.4 billion) in 2019. Among mandatory discounts, coverage gap discounts remained relatively consistent as a proportion of discounts (5.4% in 2012 vs 5.3% in 2019). Medicaid rebates decreased as a proportion of total discounts, from 19.7% in 2012 to 10.6% in 2019. The 340B discounts increased as a proportion of total discounts from 3.3% in 2012 to 9.8% in 2019. Results for the contribution of discount types to the gross-to-net bubble were consistent across insulin products. Conclusions and Relevance: Results of a decomposition of the gross-to-net bubble for leading insulin products suggest that commercial discounts play a growing role in lowering net sales compared with mandatory discounts.