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. Obtainable 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 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 traits, and the impression 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, growing the monetary publicity for sufferers needing high-cost or specialty medicines.
- Sufferers are more and more chargeable for paying coinsurance, resulting in larger 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 secure (e.g., $125 in 2014 vs. $109 in 2019), however this conceals vital variation throughout therapeutic courses
- Spending will increase have been particularly vital for sure drug courses like oncology medicines, with affected person out-of-pocket prices practically doubling for some classes between 2014 and 2020. Rebates for on-patent, brand-name medication usually scale back web costs by substantial margins (e.g., as much as 80% for some therapeutic courses like insulins), however these financial savings primarily profit insurers relatively than decreasing 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 medicines. Excessive listing costs, even when offset by rebates, disproportionately impression sufferers by larger out-of-pocket prices, significantly for these in plans with coinsurance or excessive deductibles. Clear information, like that collected by RxDC, will help policymakers design simpler interventions to scale back drug costs, enhance profit design, and make 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 Increase 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. Obtainable right here.
Researchers at Harvard examined nationwide enrollment and acquisition traits by sort of service by publicly obtainable information from CMS to investigate traits 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 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 stage) decreased reasonably, with the typical Herfindahl-Hirschman Index (weighted by county Medicare inhabitants) declining from 4,300 to three,000. Nevertheless, most native markets stay extremely concentrated.
- Development 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 stage 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 important, as national-level consolidation dangers diminishing competitors, probably driving up prices and lowering advantages for beneficiaries. Though some native markets have skilled larger competitors, the bulk stay extremely concentrated, highlighting issues about equitable entry to aggressive plan selections. These findings are significantly vital for policymakers, as fee reforms based mostly on aggressive bidding could not ship the specified price financial savings or profit enhancements with out tackling consolidation and market imbalances.
