
New Nonbiosimilar Drugs Account for Majority of Part B Drug Spending Increases
Drug spending for products facing generic or biosimilar competition decreased during the same time period.
New drugs entering the market were associated with the majority of increases in Medicare Part B spending, and some of the remainder growth in drug spending stemmed from price growth for existing single-source drugs. In comparison, Part B drug spending decreased for existing drugs facing generic or
As a result, policies targeting price growth may not have as much impact on Part B drug spending as those targeting top-selling drugs, according to a study
“From 2008 to 2021, Part B drug spending per fee-for-service (FFS) enrollee increased 9.2% per year compared with the 2.6% increase in Part D spending,” the authors explained. “Such sustained increases in spending can put pressure on Medicare program reserves and spur increases in beneficiary premiums.”
As a result, there is much interest in controlling Part B spending through policies, such as the requirement of the Inflation Reduction Act (IRA) that manufacturers of some Part B drugs pay a rebate to Medicare when the growth in drug prices outpaces inflation.
The researchers analyzed 535 unique Part B drugs and found that spending increased from $24.5 billion in 2016 to $39.5 billion in 2020. However, only 15 or fewer products accounted for half of all expenditures each year. During the study period, 7 drugs, all biologics, made up the top 25% of spending. The fact that the drugs accounting for the most spending were all biologics is important because most biologics lack biosimilar competition.
Only 3 of the 7 drugs comprising the top 25% of total Part B spending each year have biosimilars on the US market:
- Rituximab (Rituxan)—there are 3 biosimilars on the US market, and the first one launched November 2019
- Pegfilgrastim (Neulasta)—there are 6 biosimilars on the US market, and the first one launched June 2018
- Infliximab (Remicade)—there are 3 approved biosimilars in the United States, although only 3 have launched; the first one launched November 2016
Remicade, which has faced biosimilar competition the longest, was only in the top 25% of spending in 2016. After that year, the first biosimilar launched, and Remicade was no longer in the top 25%. Similarly, Neulasta dropped out of the top 25% of spending in 2018, the first year it faced biosimilar competition, and Rituxan fell out of the top 25% in 2020, shortly after its first biosimilar launched.
In 2020, $12 billion was spent on nonbiosimilar products that came to market after 2016. Existing drugs facing competition by the end of the study period saw decreased spending.
One of the key limitations noted by the authors is that drug spending and use for Medicare Advantage (MA) was not included. MA accounted for more than 40% of overall Medicare enrollment in 2020, and use of Part B drugs may differ between MA and FFS.
“Our analysis suggests that policies targeting the top-selling drugs have the greatest potential to curb spending, while those targeting price increases will have smaller effects,” the authors concluded.
In the Part D space, CMS
There are 2 etanercept biosimilars approved—one as early as August 2016—but their launches have been delayed by patent litigation. They are expected to come to market in 2029.
While there are no ustekinumab biosimilars currently approved, they can come to market
Reference
Hyland MF, Sachs RM, Robillard L, Hayford TB, Bai G. Spending on and use of clinician-administered drugs in Medicare. JAMA Health Forum. 2023;4(9):e232941. doi:10.1001/jamahealthforum.2023.2941
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