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Medicare Part D does not allow plans to exclude drugs in six protected classes from their formularies, which may limit plans' ability to negotiate rebates and lead to higher spending. We estimated the association between protected-class status, US-level estimated rebates, and formulary coverage during the period 2011-19. We found that protected classes indeed had significantly lower exclusion rates in Medicare Part D during this period relative to nonprotected classes, and this difference was larger than the corresponding difference in commercial plans. US-level average rebates grew 22.5 percentage points less in protected than in nonprotected classes during 2011-19, a period when formulary exclusions increased. Relative to nonprotected classes, US-level average rebates in protected classes were especially low among drugs with high Medicare market share. These results suggest that Medicare Part D protected-class policy may reduce rebates.

The introduction of highly effective anti-obesity drugs, such as Wegovy, has prompted debate over Medicare's prohibition on coverage of such products. In this study, we estimated the costs of allowing Medicare coverage of anti-obesity medications. Our analysis incorporated data on drug costs, real-world adherence rates, and potential changes to other health care spending. Using Medicare claims, we also documented beneficiaries' eligibility for nearly identical products approved for different indications. Assuming that anti-obesity drugs were covered in 2025 and that 5 percent or 10 percent of newly eligible patients were prescribed one, annual Part D costs were estimated to increase by $3.1 billion or $6.1 billion, respectively. The marginal costs of this policy could fall by as much as 62.5 percent from baseline estimates if products were approved for additional indications in coming years because these additional conditions are common among people with obesity. This would increase Medicare spending but would occur regardless of a policy change. Longer-term estimates come with significant uncertainty about utilization and price changes, but these results are consistent with this policy change likely increasing Medicare costs by the low to middle tens of billions of dollars over ten years.

INTRODUCTION:Until recently, the Centers of Medicare and Medicaid were restricted from negotiating drug cost. We assessed the potential impact of alternative drug sourcing models on Medicare Part D spending.METHODS:Twenty-seven drugs were extracted from 2021 Medicare Part D claims. Drug-specific/total spending was compared against cost at Mark Cuban Cost Plus Drugs Company, Costco Member Prescription Program, and Veterans Health Administration price point.RESULTS:Potential Part D savings were $798.99 million, $573.84 million, and $1.02 billion (Mark Cuban Cost Plus Drugs Company, Costco Member Prescription Program, and Veterans Health Administration, respectively).DISCUSSION:Disproportionate Part D spending likely reflects less competitive acquisition cost. Provider awareness of medications with advantaged price may promote targeted prescribing with potentially tremendous health care savings.

Drug utilization management tools can be employed to ensure that medicines are prescribed cost-effectively, but they can also be implemented in ways that reduce adherence and harm patient health. We examined trends in the prevalence of utilization restrictions on non-protected-class compounds in Medicare Part D plans during the period 2011-20, including prior authorization and step therapy requirements as well as formulary exclusions. Part D plans became significantly more restrictive over time, rising from an average of 31.9 percent of compounds restricted in 2011 to 44.4 percent restricted in 2020. The prevalence of formulary exclusions grew particularly fast: By 2020, plan formularies excluded an average of 44.7 percent of brand-name-only compounds. Formulary restrictions were more common among brand-name-only compared with generic-available compounds, among more expensive compounds, and in stand-alone compared with Medicare Advantage prescription drug plans.

We study the demand response to nonlinear price schedules using data on insurance contracts and prescription drug purchases in Medicare Part D. We exploit the kink in individuals’ budgets set created by the famous ‘‘donut hole,’’ where insurance becomes discontinuously much less generous on the margin, to provide descriptive evidence of the drug purchase response to a price increase. We then specify and estimate a simple dynamic model of drug use that allows us to quantify the spending response along the entire nonlinear budget set. We use the model for counterfactual analysis of the increase in spending from ‘‘filling’’ the donut hole, as will be required by 2020 under the Affordable Care Act. In our baseline model, which considers spending decisions within a single year, we estimate that filling the donut hole will increase annual drug spending by about $150, or about 8 percent. About one-quarter of this spending increase reflects anticipatory behavior, coming from beneficiaries whose spending prior to the policy change would leave them short of reaching the donut hole. We also present descriptive evidence of cross-year substitution of spending by individuals who reach the kink, which motivates a simple extension to our baseline model that allows—in a highly stylized way—for individuals to engage in such cross-year substitution. Our estimates from this extension suggest that a large share of the $150 drug spending increase could be attributed to cross-year substitution, and the net increase could be as little as $45 a year.

The Medicare prescription drug plan redesign under the Inflation Reduction Act of 2022 aims to simplify the Part D benefit while capping out-of-pocket spending for Part D-covered drugs. Whether and which Medicare beneficiaries will see savings from the redesigned benefit is unclear. We evaluated plan coverage and cost sharing for commonly used brand-name and generic drugs to estimate potential out-of-pocket spending changes for beneficiaries using the same drug and plan in both 2024 and 2025. We found that beneficiaries filling prescriptions for high-cost drugs would have expected mean savings of approximately $1,400 between 2024 and 2005. Beneficiaries who had spending lower than the out-of-pocket cap of $2,000 would have less consistent savings as a result of plans increasing the use of coinsurance versus copayments for preferred brands and increases in premiums among some stand-alone Part D plans. The variability across plans in expected out-of-pocket spending and premiums under the redesigned drug benefit reinforces the need for Medicare beneficiaries to shop for plans that best match their expected medication use.

Clinical trials have demonstrated that preexposure prophylaxis (PrEP) protects against HIV infection; yet, even with its approval by the Food and Drug Administration (FDA) in 2012, less than 10% of eligible users in the United States are currently taking PrEP. While there are multiple factors that influence PrEP uptake and pose barriers to PrEP implementation, here we focus on PrEP’s cost in the United States, which, at the current list price of$2000 per month and with high levels of cost sharing, can leave insured users with more than $ 1000 in out-of-pocket costs every year. We discuss how patient deductibles, monthly premiums, copayments, and coinsurance vary widely and may increase the financial burden. Although drug payment-assistance programs have made PrEP more affordable to uninsured and underinsured users, lack of insurance is a barrier to PrEP accessibility. The FDA approved a generic version in 2017; however, that version has not been distributed to US consumers and may not be more affordable. As other countries begin implementing PrEP programs, the extent of PrEP’s availability as a tool in the global fight against HIV remains to be seen.

Regulatory agencies warn about the risk of acute kidney injury (AKI) after the initiation of sodium-glucose cotransporter-2 (SGLT2) inhibitors. Our objective was to quantify the 90-day risk of AKI in older adults after initiation of SGLT2 inhibitors in routine clinical practice. We conducted a population-based retrospective cohort study in Ontario, Canada, involving adults with diabetes who were aged 66 years or older and who were newly dispensed either an SGLT2 inhibitor or a dipeptidyl peptidase-4 (DPP4) inhibitor in an outpatient setting between 2015 and 2017. We used inverse probability of treatment weighting based on a propensity score to balance the 2 groups on measured baseline characteristics. The primary outcome was 90-day risk of a hospital encounter (i.e., visit to the emergency department or admission to hospital) with AKI, which we defined by a 50% or greater increase in the concentration of serum creatinine from the baseline value or an absolute increase of at least 27 μmol/L after an SGLT2 or DDP4 inhibitor was dispensed. We obtained weighted risk ratios using modified Poisson regression and weighted risk differences using binomial regression. We included 39 094 patients with a median age of 70 (interquartile range 68–74) years in the study. Relative to new use of a DPP4 inhibitor, initiation of a SGLT2 inhibitor was associated with a lower 90-day risk of a hospital encounter with AKI: 216 events in 19 611 patients (1.10%) versus 388 events in 19 483 patients (1.99%); weighted risk ratio 0.79 (95% confidence interval 0.64–0.98). In routine care of older adults, new use of SGLT2 inhibitors compared with use of DPP4 inhibitors was associated with a lower risk of AKI. Together with previous evidence, our findings suggest that regulatory warnings about AKI risk with SGLT2 inhibitors are unwarranted.