Rising Generic Prices Help Drive Up Cost of WHO List of Essential Medicines in US

A study released Wednesday in The BMJ looking at Medicare Part D spending on generic and brand name drugs from the list of essential medications maintained by the World Health Organization (WHO) found that spending is increasing because of pricing increases for some older, generic drugs, as well as new medications. There are now fewer manufacturers of these generics, the study noted.

Earlier this year, a report said drug shortages and higher prices were putting US patients at risk. That report looked at spending and utilization within hospitals between 2015 and 2017.

This retrospective study drew upon a cost analysis of the Medicare Part D Prescriber Public Use File, detailing annual generic and brand name drug prescribing and spending from 2011 through 2015.

The WHO’s Model List of Essential Medicines (MLEM) defines a critical set of drugs that constitute the “minimum medicine needs for a basic healthcare system.” Cross referencing the MLEM with all 4498 drugs in the Medicare Part D data resulted in 319 essential medicines. The authors excluded 73 products and added 19 generic formulations of already included medicines for cases in which the brand name was prescribed more frequently than the generic.

Of the 265 essential medicines, 197 (74%) were generic. Medicare Part D spending on those drugs were $87.2 billion, with annual spending increasing from $11.9 billion in 2011 to $25.8 billion in 2015 (116%). The report said spending was driven largely by the increased use of 2 new drugs used to treat hepatitis C.

Patients’ out-of-pocket (OOP) spending for essential medicines over the same period was $12.1 billion. Total annual OOP spending increased from $2 billion to $2.9 billion (47%), and annual per beneficiary OOP spending on these drugs increased from $20.42 to $21.17 (4%).

Total prescription count increased from 376.1 million to 498.9 million (33%), and cumulative beneficiary count grew from 95.9 million to 135.8 million (42%).

The per unit cost of half of the drugs increased faster than the average inflation rate during this period. Moreover, 9 (3%) of the essential medicines saw per unit cost hikes of more than 100 times the inflation rate; 11 (4%) had per unit cost increases of between 50 and 100 times the inflation rate.

Medicines with per unit cost increases of more than 100 times the average inflation rate included the brand name drugs albendazole (Albenza), pyrimethamine (Daraprim), and penicillamine (Cuprimine) and the generic drugs tetracycline, clomipramine, mannitol, griseofulvin, chlorpromazine, and doxycycline hyclate.

OOP costs are known to be 1 of the factors affecting patient adherence to prescribed medications; policy makers should take note of changes that can help ensure that essential medicines remain accessible, the study said, lest other healthcase costs rise. For instance, legislative changes that allow CMS to negotiate drug prices or allow the importation of drugs from other countries, under specific conditions and circumstances, could help alleviate some of the pressure, the study said.

Reference

Li DG, Najafzadeh M, Kesselheim AS, Mostaghimi A. Spending on World Health Organization essential medicines in Medicare Part D, 2011-15: Retrospective cost analysis [published online July 17, 2019]. BMJ. doi: 10.1136/bmj.l4257.