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. Out there right here.
Researchers for RAND and the Workplace of the Assistant Secretary for Planning and Analysis (ASPE) checked out information collected below the RxDC (Prescription Drug Knowledge Assortment) and publicly out there sources together with the Medical Expenditure Panel Survey (MEPS,) Nationwide Well being Expenditure Accounts (NHEA) and KFF to research prescription drug spending, pricing tendencies, and the affect of rebates on insurance coverage premiums and shopper 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 medicines.
- Sufferers are more and more chargeable for paying coinsurance, resulting in increased out-of-pocket bills regardless of insurers benefiting from rebates.
- For group plan enrollees, common annual out-of-pocket spending on retail-dispensed medication remained comparatively steady (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 medicines, with affected person out-of-pocket prices almost doubling for some classes between 2014 and 2020. Rebates for on-patent, brand-name medication typically cut back web costs by substantial margins (e.g., as much as 80% for some therapeutic lessons like insulins), however these financial savings primarily profit insurers relatively 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 making certain equitable entry to medicines. Excessive record costs, even when offset by rebates, disproportionately affect sufferers via increased out-of-pocket prices, significantly for these in plans with coinsurance or excessive deductibles. Clear information, like that collected via RxDC, can assist policymakers design more practical interventions to scale back drug costs, enhance profit design, and be sure that price financial savings from rebates profit shoppers relatively than intermediaries. That is particularly well timed given ongoing debates over healthcare affordability and the position 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. Out there right here.
Researchers at Harvard examined nationwide enrollment and acquisition tendencies by sort of provider via publicly out there information from CMS to research tendencies in Medicare Benefit (MA) market competitors from 2012 to 2023. They analyzed nationwide provider 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 resulting from 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 typical Herfindahl-Hirschman Index (weighted by county Medicare inhabitants) declining from 4,300 to three,000. Nonetheless, most native markets stay extremely concentrated.
- Progress in MA was pushed by service expansions into new counties and states, with nationwide carriers coming 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 development could not considerably improve native market competitors.
Why it Issues
Analyzing the market dynamics of the increasing MA program is significant, as national-level consolidation dangers diminishing competitors, doubtlessly driving up prices and lowering advantages for beneficiaries. Though some native markets have skilled better competitors, the bulk stay extremely concentrated, highlighting considerations about equitable entry to aggressive plan selections. These findings are significantly important for policymakers, as fee reforms primarily based on aggressive bidding could not ship the specified price financial savings or profit enhancements with out tackling consolidation and market imbalances.
