In this article, Robert A. Dowling, MD, takes a look at Part B drug spending that may be of interest to the practicing urologist.
Growth in drug costs and spending for Medicare beneficiaries has been an area of concern for patients, policymakers, and regulators for several years. Medicare pays for most drugs through either the Part B program (generally injectable medications purchased by providers and administered in a clinical setting) or the Part D program (generally prescribed oral and patient-administered medications).
Most urologists know Part B drugs as those that they “buy and bill,” and most of these drugs are reimbursed on the basis of an “average sales price” plus 6%, less any sequester. Not all physicians pay the same purchase price for a drug, but for any given drug there is only one “average sales price” that determines reimbursement. Therefore, a practice that purchases a drug below average sales price (which is recalculated quarterly) will realize more revenue from administering it to a patient than a practice that pays more than the average sales price. It is even possible to be “under water” on Part B drugs-meaning it costs a practice more to administer an individual drug than Medicare pays.
Factors that determine the average sales price include supply, demand, the availability of generic or biosimilar products, the number of manufacturers (competition), and other economic forces. Policymakers and regulators worry that the average sales price reimbursement methodology encourages physicians to use more expensive drugs when there is a choice of drugs or causes them to question whether to treat at all. Drugs and biologicals may be a frequent target of medical reviews (bit.ly/reviewtopics).
Also by Dr. Dowling: How to leverage industry relationships while avoiding risks
Various attempts at reforming the Part B program have been made since its inception-with limited or unproven success at lowering costs. Yet it remains an active area of policymaking and scrutiny by the stewards of Medicare and the public. In this article, I take a look at Part B drug spending that may be of interest to the practicing urologist.
Next:Total spending up nearly 6%Total spending up nearly 6%
The Centers for Medicare & Medicaid Services (CMS) recently released detailed drug spending data for the years 2013-2017. “Spending” in this context includes the estimated total costs, including deductible, coinsurance, and Medicare spending. Total spending in 2017 for the Part B program was nearly $29.5 billion, up 5.94% from 2016 (bit.ly/partbdashboard). Spending on any single drug may increase because of increased utilization, increased price, or both.
Let’s take a closer look at some individual drugs that urologists typically use in their practice. (It is not possible using this data to determine what fraction of spending is “ordered” by urologists or the indication for any individual drug.)
Of 16 common drugs used in the urology office for Medicare beneficiaries (table), the drug with the largest 2017 total spend was denosumab ($1.24 billion). In 2017, utilization for denosumab increased 7.32%, spending per dose increased 6.35%, and total spending increased 14.15% compared to 2016. Denosumab spending has increased 4.31% per year over the last 5 years, which may explain why denosumab is the target of automated medical review in at least one state (Florida) (bit.ly/Proliareview).
The drug with the largest annual growth in spending per dose unit is mitomycin (47.38% annual growth); spending per dose on mitomycin increased 14.25% in 2017 alone, but total spending was down 42.05% largely due to a significant decrease in utilization (almost 50%).
In the androgen suppression market (figure), leuprolide acetate (Lupron) spending in 2017 was $267 million (7.47% less than in 2016) or 83.5% of spending in this drug class. Over the last 5 years, growth in spending per dose has been flat. The largest growth in utilization was seen with triptorelin pamoate, and the largest decrease in utilization was with histrelin acetate. Triptorelin pamoate has seen the largest annual average growth in spending per dose-17.25%.
In general, among these 16 drugs, those with one or two manufacturers have seen positive annual growth in spending per dose (a surrogate for price), and those with three or more manufacturers have seen negative annual growth. Gentamicin is an exception to this rule, with six manufacturers, 16% growth in spending per dose in 2017, and 7% average annual growth over the last 5 years.
Bottom line: Of 16 Part B drugs commonly used by urologists, seven drugs increased in spending faster than Part B spending overall in 2017 (5.94%). The drug with the largest total spend is denosumab, and the drug with the largest annual growth in spending per dose over the last 5 years is mitomycin (47.38%). Mitomycin, valrubicin, and histrelin acetate saw the largest decreases in both utilization and total spending in 2017 compared to 2016. Urologists should be familiar with the average sales price and trends of the common Medicare Part B drugs administered to their patients.