Obamacare’s Effect on Drug Spending

This blog post was written by Ben Comer.

Provisions in the Affordable Care Act (ACA) drove out-of-pocket costs down, while increasing drug spending among 19 to 25-year-olds in 2011, according to research published on Wednesday. The decline observed in overall out-of-pocket spending last year was the “first on record,” and was “largely related to the introduction of the ‘donut-hole’ subsidy for Medicare Part D beneficiaries,” a highly-touted element of the ACA, according to the IMS Institute for Healthcare Informatics. While copays for commercial providers and Medicaid were flat (average commercial plan copays increased by $1.14, to $26.10 in 2011), seniors covered by Medicare Part D got the largest break, with average copays decreasing by $2.66 – from $25.97 in 2010, to $23.31 in 2011 – according to the report.

The dip in copay costs for seniors didn’t translate into an increase in volume for chronic or acute medications, however; in fact, patients 65-years and older reduced their drug usage by 3.1%. Prescription use among the same group declined in 2010 as well, by 2.7%, but the last two years represent an inflection from prior years, when “seniors’ usage of medicines grew on average at 4%,” the report found. College-aged patients (19-24 years old), on the other hand, were the only age group to increase their drug usage, by a modest 2%. That increase “coincides with the first full year of implementation of the provision of the ACA allowing under-26-year-olds to stay on their parents’ health insurance,” according to the report.

Michael Kleinrock, director of research development at the institute, said on a call with reporters that patients over 65 years old are foregoing the medications they use the most. Drug usage for hypertension, the most common disease among this population, decreased more than any other class of drugs. “This correlates strongly with the economy…seniors are on a fixed income, and costs [of living] are rising,” said Kleinrock on the call. Kleinrock called the development a “tipping point,” adding that seniors are resetting their expectations around how often, and under what circumstances, they will visit a doctor.

Per capita figures adjusted for currency changes showed a 0.5% growth in total drug spending in 2011 – to $320 billion. Other fun facts from the report include:

• New York state had far and away the largest growth in per capita retail prescription usage at 5.6%, bucking the national trend. Volume rates fell in 41 states.

• Visits to the ER increased by 7.4%, while doctor’s office visits decreased by 4.7%, from 2010 to 2011, a “possible result of continued high levels of uninsured patients associated with long-term unemployment,” according to the report.

• Copay card usage increased in 2011, but only by 1.4%. Still, patients used copay cards or vouchers for only 3.8% of dispensed brand prescriptions last year. The average copay card subsidy provided by drug manufacturers grew by 20%, from $19.34 in 2010, to $24.28 in 2011.

• Spending on new brand drugs – products approved in the last 24 months – was $12.2 billion, up from $8.5 billion in 2010.

• 34 new molecular entities (NMEs) launched in 2011, the most in “at least 10 years,” according to the report

• Key blockbusters that expired in 2011: Pfizer’s Lipitor, GSK’s Advair Diskus, Lilly’s Zyprexa, and J&J’s Levaquin and Concerta.

• Hydrocodone, an opioid for pain, was once again the most dispensed drug last year, at 136.7 million prescriptions.

• Among therapeutic classes, anti-depressants were dispensed most often, at 264 million prescriptions in 2011.

If the Supreme Court decides in favor of the Affordable Care Act, particularly the mandate to buy insurance, the spate of newly insured patients would likely curb the rise in emergency room admissions, and could also turn around the decrease in office visits, which are “the lowest-cost medical interventions,” according to the report.

This blog post originally appeared on the Pharmaceutical Executive blog.