A snowy first week of January gave us loads of time to learn a few of the final analysis from 2024. This month we examine prescription drug pricing and the impacts of rebates on shoppers, in addition to market shares of Medicare Benefit carriers.
Prescription Drug Costs, Rebates and Insurance coverage Premiums
Andrew W. Mulcahy, Preethi Rao, Lindsey Patterson, Annetta Zhou, Jonathan S. Levin, Rachel O. Reid, Sarah Junghee Kang, Zetianyu Wang, Susan L. Lovejoy. RAND. December 2024. Accessible here.
Researchers for RAND and the Workplace of the Assistant Secretary for Planning and Analysis (ASPE) checked out knowledge collected underneath the RxDC (Prescription Drug Information Assortment) and publicly obtainable sources together with the Medical Expenditure Panel Survey (MEPS,) Nationwide Well being Expenditure Accounts (NHEA) and KFF to investigate prescription drug spending, pricing developments, and the affect of rebates on insurance coverage premiums and client prices.
What it Finds
- Employer-sponsored and market well being plans are shifting towards tiered formularies and better deductibles, rising the monetary publicity for sufferers needing high-cost or specialty drugs.
- Sufferers are more and more answerable for paying coinsurance, resulting in greater out-of-pocket bills regardless of insurers benefiting from rebates.
- For group plan enrollees, common annual out-of-pocket spending on retail-dispensed medicine remained comparatively secure (e.g., $125 in 2014 vs. $109 in 2019), however this conceals important variation throughout therapeutic lessons
- Spending will increase have been particularly important for sure drug lessons like oncology drugs, with affected person out-of-pocket prices practically doubling for some classes between 2014 and 2020. Rebates for on-patent, brand-name medicine usually scale back internet costs by substantial margins (e.g., as much as 80% for some therapeutic lessons like insulins), however these financial savings primarily profit insurers somewhat than reducing sufferers’ prices on the level of sale.
Why it Issues
Understanding the dynamics of prescription drug pricing and spending is essential for addressing rising healthcare prices and guaranteeing equitable entry to drugs. Excessive listing costs, even when offset by rebates, disproportionately affect sufferers via greater out-of-pocket prices, significantly for these in plans with coinsurance or excessive deductibles. Clear knowledge, like that collected via RxDC, may also help policymakers design simpler interventions to cut back drug costs, enhance profit design, and be sure that value financial savings from rebates profit shoppers somewhat than intermediaries. That is particularly well timed given ongoing debates over healthcare affordability and the function of Pharmacy Profit Managers (PBMs) within the pharmaceutical provide chain.
Medicare Benefit: Nationwide Carriers Develop Market Share Whereas Regional Carriers With out Affiliation Decline, 2012-23
Joseph G. P. Hnath, J Michael McWilliams, and Michael E. Chernew. Well being Affairs. December 2024. Accessible here.
Researchers at Harvard examined nationwide enrollment and acquisition developments by kind of service via publicly obtainable knowledge from CMS to investigate developments in Medicare Benefit (MA) market competitors from 2012 to 2023. They analyzed nationwide service consolidation, native market dynamics, and their implications for competitors and coverage reforms.
What it Finds
- From 2012 to 2023, the market share of 5 main nationwide MA carriers grew from 46% to 66%, primarily because of acquisitions, whereas the share held by regional carriers with out affiliations (the first goal of acquisitions) declined from 25% to six%.
- Native market focus (measured on the county degree) decreased reasonably, with the common Herfindahl-Hirschman Index (weighted by county Medicare inhabitants) declining from 4,300 to three,000. Nevertheless, most native markets stay extremely concentrated.
- Progress in MA was pushed by service expansions into new counties and states, with nationwide carriers getting into extra markets. Startups and smaller gamers remained marginal contributors, holding simply 2% of market share collectively by 2023.
- Elevated competitors on the native degree has largely plateaued in areas the place MA penetration exceeds 20%, suggesting future MA progress might not considerably improve native market competitors.
Why it Issues
Inspecting the market dynamics of the increasing MA program is significant, as national-level consolidation dangers diminishing competitors, doubtlessly driving up prices and decreasing advantages for beneficiaries. Though some native markets have skilled better competitors, the bulk stay extremely concentrated, highlighting issues about equitable entry to aggressive plan decisions. These findings are significantly important for policymakers, as fee reforms based mostly on aggressive bidding might not ship the specified value financial savings or profit enhancements with out tackling consolidation and market imbalances.
