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05 September 2024 | Country Update
Results of First Round of Medicare Prescription Drug Negotiations
5.6. Pharmaceutical care
Authors
References
CMS.gov. “Negotiating for Lower Drug Prices Works, Saves Billions.” 15 August 2024. https://www.cms.gov/newsroom/press-releases/negotiating-lower-drug-prices-works-saves-billions
CMS. Gov. “Fact Sheet: Medicare Drug Price Negotiation Program Draft Guidance for 2027 and Manufacturer Effectuation of the Maximum Fair Price in 2026 and 2027.” May 2024. https://www.cms.gov/files/document/fact-sheet-medicare-drug-price-negotiation-program-ipay-2027-and-manufacturer-effectuation-mfp-2026.pdf
Neuman T, Cubanski J, Levitt L. “The First-Ever Government Negotiation Process For Drugs Has Finished, But The Politics Are Ongoing.” Health Affairs Forefront. 19 August 2024. https://www.healthaffairs.org/content/forefront/first-ever-government-negotiation-process-drugs-has-finished-but-politics-ongoing
5.6.1. Definition, services and utilization
Pharmaceuticals are highly utilized in the United States. From 2015 to 2016 close to 50% of all Americans used one or more prescription drugs within a 30 day period (Martin et al., 2020). Utilization is particularly high among those aged 60 years and older (85%). It is even fairly substantial among children 0–11 years (18%) and 12–19 years (27%). The number of prescription drugs filled by Americans has grown four times more than population growth over the past two decades (Carr, 2017). Between 1980 and 2015 per capita expenditures on pharmaceuticals climbed from US$ 53 per year to US$ 1011 per year (Sarnak et al., 2017). Expenditures in 2015 are 30–90% higher in the United States than in nine other high-income countries (Sarnak et al., 2017). Although US spending on pharmaceuticals is significantly higher than other high-income countries, utilization is similar (slightly above the median) (O’Neill & Sussex, 2014), leaving the type of medications utilized and drug prices as primary reasons for the differences in spending.
Pharmaceutical production and marketing in the United States are completely privatized but regulated by the FDA of the federal government. Prices are not regulated, not even for drugs obtained for publicly insured individuals, although the government negotiates payment discounts in some of its programmes, such as Medicaid (but not Medicare, where a provision in the Part D legislation prohibits Medicare from negotiating bulk discounts on drugs).The regulation of pharmaceuticals is discussed in section 2.7.3.
Strictly speaking, “pharmaceutical care” includes both the drugs that patients receive and the advice and information from pharmacists regarding those medications (Shi & Singh, 2019). Pharmacists advise both physicians and patients regarding drug effects, side-effects and interactions. They may assist the physician in deciding the optimum medication to prescribe and with titration of dosage.
In the ambulatory care setting, pharmaceutical care is provided in pharmacies located in clinics and commercial stores, where physician prescriptions are filled for the public. Institutional settings, such as hospitals and nursing homes, have pharmacy departments that dispense medications and information.
5.6.2. Accessibility, adequacy and quality of pharmaceutical care
Pharmaceuticals are both overused and underused in the United States. Overuse and inappropriate use have been noted to occur with certain medications such as antibiotics, antidepressants and other psychotropics, and opioids (see section 5.11.2) and other painkillers (Boehlen et al., 2019; Fiore et al., 2017; Hsu, 2017; McLaren & Lichtenstein, 2018; Scott et al., 2015). Among the elderly, inappropriate prescribing and polypharmacy are major concerns (Liu, 2014; Oktora et al., 2019; Scott et al., 2015). Inappropriate medications are those for which the potential risk outweighs the potential benefit and those for which a good alternative is available (Fahrni et al., 2019). Polypharmacy is the concurrent use of five or more medications (Liu, 2014; Oktora et al., 2019). It can cause serious adverse events in the elderly since their bodies have more difficulty absorbing, metabolizing and eliminating drugs (Liu, 2014; Oktora et al., 2019).
Underuse is associated mainly with financial barriers (Miranda, Serag-Bolos & Cooper, 2019). The prevalence of cost-related medication underuse in the form of not filling out a prescription or skipping a dose is nearly 17% in the United States (Morgan & Lee, 2017).
Pharmaceuticals are high-expense health care items. For those who do not have drug coverage through insurance, and who must pay out of pocket, the cost of prescription medications can comprise a significant proportion of their monthly income. Many cannot afford the medications and will either not fill prescriptions or will try to stretch the medications out over longer periods of time by cutting pills in half and other dangerous measures (Herman et al., 2015).
For those who have insurance with drug benefits, coverage of pharmaceuticals is uneven. Co-payments, deductibles, caps and other cost-sharing methods are used by both public and private insurance. Medicare only added a drug benefit option in 2006. As discussed in section 3.3.1, there are significant gaps in coverage in the Medicare drug plans. Medicaid drug plans differ from state to state. Although outpatient prescription drugs are an optional benefit, all states currently provide coverage (CMS, 2019c). They are permitted to have formularies and to exclude classes of drugs. States may require co-payments, especially for non-generics.
Employer-based insurance plans often have prescription drug benefits, but formularies may be limited and there is cost-sharing, sometimes to a significant degree. These plans may have deductibles that must be met before the benefits kick in, co-payments for each prescription, or a cap on the amount covered in a year. Employer-based plans may also cover generic drugs at a higher rate than non-generics (Kaiser Family Foundation, 2018b).
In 2018, 69% of all private industry workers had health insurance coverage through their place of employment (BLS, 2018d), and nearly all these workers’ plans (99%) included outpatient drug coverage (Kaiser Family Foundation, 2018b). All plans had cost-sharing arrangements, most commonly co-payments for non-generic drugs (Kaiser Family Foundation, 2018b). A few plans had no cost-sharing for generic drugs.
Several studies indicate that the cost-sharing strategies of all types of insurance can lead to underutilization of necessary and effective medications (Shi, Lebrun & Tsai, 2010) and that, vice versa, reducing or removing cost-sharing improves medication adherence (Sensharma & Yabroff, 2019). For example, Medicare beneficiaries who reached the doughnut hole – a gap in coverage where co-payments are 100% – were twice as likely to discontinue their medication compared to those who had not (Polinski et al., 2011). Individuals with no co-payments have better medication adherence and fewer vascular events than those with co-payments (Choudry et al., 2011).
Disparities in access to pharmaceuticals exist along race, ethnicity, socioeconomic and other demographic lines. Compared to Whites, Hispanics are less likely to receive prescriptions (Shi, Lebrun & Tsai, 2010). Those who are Hispanic, Black, over the age of 74, unmarried, in poor health, have a low- to middle-income or have less than a high school degree are more likely to be covered for medications through a public programme or to have no insurance for medications (Kanavos & Gemmill-Toyama, 2010).
5.6.3. Initiatives to improve pharmaceutical care
Polypharmacy and inappropriate prescription of medications among the elderly are being addressed by physicians through the use of screening criteria such as the Beers criteria and the systematic discontinuation of a proportion of medications. The Beers criteria tool, first developed in 1997 and updated in 2002, classifies drugs according to those that should be avoided in older adults, those that exceed a maximum recommended daily dose and those that should be avoided in combination with certain patient comorbidities (American Geriatrics Society, 2019). The tool, with adjustments, is being used in elderly and non-elderly populations that use a large number of medications. Systematic reduction of medications has been shown to improve the health of patients with polypharmacy (Garfinkel & Mangin, 2010).
Federal, state and professional policies and guidelines, such as state-based prescription drug monitoring programs (PDMPs), have been implemented to monitor and reduce misuse of opioids (Gugelmann & Perrone, 2011). PDMPs are data repositories that make information on the prescribing history of individuals available to prescribers. There is some evidence that states that have adopted PDMPs have had reductions in opioid prescribing and opioid-related morbidity and mortality (Patrick et al., 2016). By 2014, 49 states had implemented a PDMP (Patrick et al., 2016).
Underuse of medications due to affordability concerns is being addressed through expansion of general insurance under the ACA. For Medicare patients, in 2011 a gradual reduction in the size of the doughnut hole began, and it will be eliminated entirely in 2020. At that point, standard Part D drug coverage will include a 25% coinsurance rate after a deductible, until catastrophic coverage kicks in after the person has spent several thousand dollars out of pocket.