New CMS pharmacy dashboards include data sets from 2013 to 2017.
The Centers for Medicare & Medicaid Services (CMS) has released its latest “CMS Drug Spending Dashboards.” While the dashboards are interactive (you can look up specific drug data), we took a broader approach and downloaded and analyzed the source data.
The dashboard has the following data sets for 2013 through 2017:
- Medicare Part D
- Medicare Part B
For each drug and manufacturer, the data includes:
- Total Spending
- Total Dosage Units
- Total Claims
- Total Beneficiaries
- Average Spending Per Dosage Unit (Weighted)
- Average Spending Per Claim
- Average Spending Per Beneficiary
- Change in Average Spending Per Dosage Unit (2016-2017)
- Annual Growth Rate in Average Spending Per Dosage Unit (2013-2017)
We specifically looked at Part D drugs with spending of over $1 billion. These drugs turned out to be focused on the following diseases:
|Type 1 and Type 2 Diabetis||$8,212,926,788||14,686,100|
|Type 2 Diabetis||$3,817,588,316||5,785,217|
Here are some of the critical trends we noted. First, the increase in the average Medicare costs for these drugs vastly outpaced inflation.
Xarelto, for instance, a drug for treating blood clots, had an increase in market price for a monthly supply from $258.82 in 2013 to $461.40 in 2017. Xarelto also saw an increase in Medicare Part D payment rates for the same monthly supply, from $130.91 to $192.46 the same period. This yields increases in market cost and Medicare cost of 78 and 47 percent, respectively. Over the same period of time, according to the Bureau of Labor Statistics, wages only increased 12 percent. This means the cost of the drug was increasing 4 to 7 times faster than the inflation rate for salaries.
We used salaries for two reasons in our analysis. First, because the cost of the drug is borne by people earning wages. Secondly, since the drug was fully developed, it made sense to us to use salaries since the main cost-driving production should be wages.
We noted that marketing appears to influence drug spending. Advertisements for drugs with over $1 billion in Medicare spending, including Xarelto (blood clots), Eliquis (blood clots), Harvoni (Hepatitis C) and Restasis (dry eye) seem to flood our media screens.
As a final comment, it seems that many of the costly drugs relate to disease conditions heavily impacted by our own behavior. One of the biggest causative factors in COPD, for instance, is smoking. Similarly, the prevalence of type-2 diabetes correlates with America’s struggles with obesity.
As the last comment on something that may impact future drug development, we noted that actually curing a disease does not always help the drug companies’ bottom lines. Harvoni may have been a victim of its own success. Sales of this drug that treats hepatitis C fell from $4,399,701,570 in 2016 to $2,555,839,933 in 2017 as the patients that took the drug were cured.
We can’t imagine the pharmaceutical companies are not given pause by this.