Updated on: March 25, 2019

CMS Pharmacy Dashboard Insights

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Original story posted on: March 20, 2019

New CMS pharmacy dashboards include data sets from 2013 to 2017.

The Centers for Medicare & Medicaid Services (CMS) has released its latest “CMS Drug Spending Dashboards.” While the dashboards are interactive (you can look up specific drug data), we took a broader approach and downloaded and analyzed the source data.

The dashboard has the following data sets for 2013 through 2017:

  • Medicare Part D
  • Medicare Part B
  • Medicaid

For each drug and manufacturer, the data includes:

  • Total Spending
  • Total Dosage Units
  • Total Claims
  • Total Beneficiaries
  • Average Spending Per Dosage Unit (Weighted)
  • Average Spending Per Claim
  • Average Spending Per Beneficiary
  • Change in Average Spending Per Dosage Unit (2016-2017)
  • Annual Growth Rate in Average Spending Per Dosage Unit (2013-2017)

We specifically looked at Part D drugs with spending of over $1 billion. These drugs turned out to be focused on the following diseases:

Disease

Medicare D 2017 Spend

Claims

Type 1 and Type 2 Diabetes

$8,212,926,788

14,686,100

Blood Clots

$5,687,988,232

11,591,007

COPD

$5,547,814,048

12,289,852

Type 2 Diabetes

$3,817,588,316

5,785,217

Multiple Myeloma

$3,312,773,264

259,693

Psoriasis

$3,039,841,725

498,979

Hep C

$2,555,839,934

81,898

Nerve pain

$2,517,073,735

5,072,269

Multiple Sclerosis

$1,499,493,336

231,973

Hyperthyroidism

$1,436,678,980

985,214

Breast Cancer

$1,399,517,851

125,619

Leukemia

$1,368,727,295

131,205

Renal Failure

$1,316,266,396

892,182

Arthritis

$1,157,839,006

224,688

Dry Eye

$1,049,441,691

1,646,672

Grand Total

$43,919,810,595

54,502,568


Here are some of the critical trends we noted. First, the increase in the average Medicare costs for these drugs vastly outpaced inflation. 

Xarelto, for instance, a drug for treating blood clots, had an increase in market price for a monthly supply from $258.82 in 2013 to $461.40 in 2017. Xarelto also saw an increase in Medicare Part D payment rates for the same monthly supply, from $130.91 to $192.46 the same period. This yields increases in market cost and Medicare cost of 78 and 47 percent, respectively. Over the same period of time, according to the Bureau of Labor Statistics, wages only increased 12 percent. This means the cost of the drug was increasing 4 to 7 times faster than the inflation rate for salaries. 

We used salaries for two reasons in our analysis. First, because the cost of the drug is borne by people earning wages. Secondly, since the drug was fully developed, it made sense to us to use salaries since the main cost-driving production should be wages.

We noted that marketing appears to influence drug spending. Advertisements for drugs with over $1 billion in Medicare spending, including Xarelto (blood clots), Eliquis (blood clots), Harvoni (Hepatitis C) and Restasis (dry eye) seem to flood our media screens.      

As a final comment, it seems that many of the costly drugs relate to disease conditions heavily impacted by our own behavior.  One of the biggest causative factors in COPD, for instance, is smoking.  Similarly, the prevalence of type-2 diabetes correlates with America’s struggles with obesity.

As the last comment on something that may impact future drug development, we noted that actually curing a disease does not always help the drug companies’ bottom lines. Harvoni may have been a victim of its own success. Sales of this drug that treats hepatitis C fell from $4,399,701,570 in 2016 to $2,555,839,933 in 2017 as the patients that took the drug were cured.

We can’t imagine the pharmaceutical companies are not given pause by this.

Timothy Powell, CPA CHCP

Timothy Powell is a nationally recognized expert on regulatory matters, including the False Claims Act, Zone Program Integrity Contractor (ZPIC) audits, and U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) compliance. He is a member of the RACmonitor editorial board and a national correspondent for Monitor Mondays.

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