Impact of the Pilot Volume-Based Drug Purchasing Policy in China: Interrupted Time-Series Analysis with Controls

Centralizing procurement for prescription drugs has the potential to reduce drug spending by creating economies of scale and by improving purchasing power. In March 2019, the Chinese government launched a volume-based purchasing (VBP) pilot program using a competitive bidding process to purchase accredited generic drugs for which branded drug substitutes were available. We performed an interrupted time-series design to estimate the change in monthly drug purchase quantity and spending comparing 14 months before and 7 months after the VBP pilot. We obtained monthly prescription drug purchase data for all purchases from public medical institutions in the three large pilot cities (Beijing, Shanghai and Xi’an) and two non-pilot cities (Changsha and Zhengzhou) between January 2018 to September 2019. We used negative binomial regression and log-linked Gamma Generalized Linear Model for purchase quantity and spending respectively. We evaluated heterogeneity of impact by pilot city, drug type (selected or non-selected drugs), and therapeutic class (cardiovascular disease, mental disorder and cancer) separately. The implementation of the pilot reform was associated with a 132% (95%-CI: 104–165%, p < 0.001) increase in the purchase quantity of selected drugs in pilot cities compared to an 17% decrease (95%-CI: 9–25%, p < 0.001) in control cities. In contrast, the purchase quantity of branded and other drugs in pilot cities decreased by 38% (95%-CI: 27–46%, p < 0.001) and 77% (95%-CI: 71–81%, p < 0.001), respectively; while in control cities, these remained at similar levels. Overall, in pilot cities, there was a 35% (95%-CI: 28–41%, p < 0.001) decrease in the purchase spending for all drugs in the first post-policy month, from 8.1 billion CNY estimated in the absence of VBP down to 5.3 billion CNY; in control cities, the change was negligible. The largest reduction in spending occurred for drugs for the treatment of cardiovascular diseases. The evidence suggests a positive impact of the VBP pilot in reducing overall drug spending and increasing the use of accredited generics in three pilot cities. This overall trend is not observed in two non-pilot cities. Assessments of long-term impact of the VBP policy on additional key outcomes including drug prescriptions, drug utilization, patients’ health outcomes and payments on drugs are needed.

Medicare Part D spending for the 10 costliest oral anticancer drugs.

52 Background: Novel oral targeted drugs are being used more frequently to treat many cancers and have substantially improved clinical and survival outcomes. Due to the long treatment durations of many of these medications, which are given continuously until patient progression, per-patient lifetime costs can be high. This study aimed to identify the ten oral anticancer therapies with the highest annual Medicare Part D spending. Methods: Descriptive statistics were performed on data obtained from the CMS Medicare Part D Drug Spending Dashboard and IBM Micromedex RED BOOK, from 2018-2019. Medicare Part D dashboard includes total and average drug spending, and number of beneficiaries utilizing the drug. RED BOOK provides current and historical average wholesale pricing (AWP) data for all prescription drugs. The wholesale acquisition cost (WAC) was calculated from the AWP to evaluate trends in price. We identified the ten anticancer brand-name medications in 2019 with the highest annual Part D spending and reported changes in average spending and number of unique beneficiaries for each drug from 2018-2019. Results: In 2019, Revlimid had the highest annual total Part D spending at $4.6 billion, followed by Imbruvica with $2.4 billion; these drugs also had the greatest number of beneficiary utilizers. From 2018-2019, change in average spending per dosage unit was greatest for Zytiga (34%), however among all drugs, average spending per beneficiary in 2019 was lowest for this medication ($58,074). From 2018-2019, WAC and average spending per dosage unit increased for all of the top ten drugs, as well as the number of total beneficiaries utilizing each drug, except for Zytiga and Sprycel. Conclusions: Oral anticancer therapies provide high value for patients, including improved quality of life and survival. Annual costs for these drugs are high, however spending on inpatient hospital services remains a greater share of total Medicare spending in aggregate and on a per beneficiary basis. Emerging one-time curative treatments for cancer may prove most cost-effective in the long-term by eliminating the need for continuous medication use and hospital care, while improving patient outcomes.[Table: see text]

Introduction

The pharmaceutical industry has produced wondrous scientific advances, but the progress has come at a cost. US prescription drug spending has increased faster in most recent years than other categories of health and now comprises roughly one-sixth of total health expenditures. Rising costs strain already stretched public budgets. Increasing patient out-of-pocket spending for deductibles and coinsurance has created financial difficulties for many individuals and their families, particularly among the sickest patients. The dueling trends of scientific breakthroughs and ever-rising spending present enduring challenges. On its own, rising spending would not be so concerning, but evidence suggests that drug prices often do not reflect the benefits they provide. Thus, there is an imperative to measure the value of prescription drugs and incorporate such measures into drug pricing policies.

National trends in prescription drug expenditures and projections for 2021

Purpose To report historical patterns of pharmaceutical expenditures, to identify factors that may influence future spending, and to predict growth in drug spending in 2021 in the United States, with a focus on the nonfederal hospital and clinic sectors. Methods Historical patterns were assessed by examining data on drug purchases from manufacturers using the IQVIA National Sales Perspectives database. Factors that may influence drug spending in hospitals and clinics in 2021 were reviewed—including new drug approvals, patent expirations, and potential new policies or legislation. Focused analyses were conducted for biosimilars, cancer drugs, generics, coronavirus disease 2019 (COVID-19) pandemic influence, and specialty drugs. For nonfederal hospitals, clinics, and overall (all sectors), estimates of growth of pharmaceutical expenditures in 2021 were based on a combination of quantitative analyses and expert opinion. Results In 2020, overall pharmaceutical expenditures in the United States grew 4.9% compared to 2019, for a total of $535.3 billion. Utilization (a 2.9% increase) and new drugs (a 1.8% increase) drove this increase, with price changes having minimal influence (a 0.3% increase). Adalimumab was the top drug in 2020, followed by apixaban and insulin glargine. Drug expenditures were $35.3 billion (a 4.6% decrease) and $98.4 billion (an 8.1% increase) in nonfederal hospitals and clinics, respectively. In clinics, growth was driven by new products and increased utilization, whereas in hospitals the decrease in expenditures was driven by reduced utilization. Several new drugs that will influence spending are expected to be approved in 2021. Specialty and cancer drugs will continue to drive expenditures along with the evolution of the COVID-19 pandemic. Conclusion For 2021, we expect overall prescription drug spending to rise by 4% to 6%, whereas in clinics and hospitals we anticipate increases of 7% to 9% and 3% to 5%, respectively, compared to 2020. These national estimates of future pharmaceutical expenditure growth may not be representative of any particular health system because of the myriad of local factors that influence actual spending.

Prescription Drug Priorities under the Biden Administration

In January 2021, the incoming Biden administration will inherit urgent priorities to curb health care spending and expand health care coverage to millions of Americans while also addressing the COVID-19 pandemic and resulting economic downturn. Among these competing priorities is the issue of access to and affordability of prescription drugs. Here, we outline Biden’s plan to directly lower prescription drug spending for payers and patients and to expand access to prescription medications through improved health insurance coverage. These policies could provide important financial protections for Americans against high prescription drug prices. Despite widespread public support for addressing prescription drug prices, many of Biden’s plans rely on Congressional action, which will be complicated by the narrow majority held by Democrats in the House and an evenly divided Senate. However, there may be other opportunities to reduce prescription drug spending and improve health insurance enrollment among the uninsured. While directly lowering drug prices would provide the most widespread savings for payers and patients alike, any successful effort to increase the number of Americans enrolled in health insurance or render it more affordable will still likely effectively lower patients’ out-of-pocket costs and improve access to prescription drugs.

A Dose of Managed Care: Controlling Drug Spending in Medicaid

We study the effect of privatizing Medicaid drug benefits on drug prices and utilization. Drug spending would decrease by 21.3 percent if private insurers administered all drug benefits. One-third of the decrease is driven by private insurers’ ability to negotiate prices with pharmacies. The remaining two-thirds is driven by the greater use of lower cost drugs, such as generics, and is only realized in states that give private insurers the flexibility to design drug benefits. Privatization does not reduce prescriptions per enrollee and spending cuts are smaller for drugs that lower medical spending. (JEL G22, H51, I11, I13, I18, I38, L65)