Medicare shelled out more than $103 billion on prescription drugs in 2013, raising questions about why the government pays so much for brand-name pharmaceuticals and how physicians prescribe drugs for their patients.
The CMS released Medicare Part D data on 36 million beneficiaries last week, breaking down pharmaceutical information to granular levels of payment and physician prescribing patterns. Health policy experts viewed the data release, part of the Obama administration's push for increased healthcare transparency, as a positive step toward shining a light on how Medicare operates.
“It will stimulate a lot of discussions about pharmaceuticals between patients and physicians that will ultimately prove to be valuable,” said Dan Mendelson, CEO of Washington-based consulting firm Avalere Health.
But the data also show Medicare Part D private plans paid a lot for brand-name drugs even though cheaper alternatives may have been available.
Nexium, a drug that treats heartburn, manufactured by AstraZeneca, cost Medicare Part D $2.5 billion in 2013—the most spent on any drug. Prilosec, an over-the-counter alternative, generally isn't covered by Part D, but Prilosec's generic version, omeprazole, is covered. Medicare spent $643 million that year on omeprazole.
Nexium cost $308 for each prescription, while omeprazole cost less than $20 per claim.
“I was quite surprised by that,” Bruce Stuart, executive director of the University of Maryland's Peter Lamy Center for Drug Therapy and Aging, said of Nexium's cost to Part D. The top 10 costliest drugs—all brand-names—represented $18.8 billion in spending.
Data also showed exactly how much of a given drug an individual physician has prescribed. Some data advocates say it could spot potentially fraudulent actors, and when paired with CMS' Open Payments website, could show instances of undue influence from drug companies.
For example, the Part D data show Michigan-based neurologist Dr. Gavin Awerbuch prescribed more than $6.4 million worth of the pain reliever Subsys in 2013. Insys Therapeutics, the maker of Subsys, paid Awerbuch more than $56,000 that same year in consulting fees and food perks. The federal government started a criminal investigation last year, accusing him of Medicare fraud.
The Pharmaceutical Research and Manufacturers of America, the lobbying arm of the drug industry, blasted the data release as “misleading” and “inaccurate” because the figures do not include price rebates. “As with all data, it is important to look at these numbers in context,” PhRMA CEO John Castellani said.
The American Medical Association also criticized the government, saying the data could unfairly characterize physicians and misrepresent how they prescribe drugs. For instance, the AMA said physicians who work in hospices may appear to be heavy opioid prescribers, but their patients may actually need the drugs. “The data released today is much more complex than initially meets the eye,” said AMA President Dr. Robert Wah.
Medicare Part D, created in 2003, is expected to cost taxpayers $76 billion this year after accounting for the premiums seniors pay, according to the Congressional Budget Office.