Concentration of spending and share of specialty drug spending in Medicare Part D over a 10-year period.

Abstract

Background: In 2021, Medicare Part D gross prescription drug spending amounted to $216 billion, a number that has more than doubled over the last 10 years. Spending in Medicare Part D is concentrated on a small number of drugs, and spending on specialty drugs has increased in recent years. However, the extent to which concentration in Part D spending has changed over time and the drivers of this change have not been described.

Objective: To quantify the time trends in Medicare Part D spending and utilization, the concentration of spending, and the share of spending accounted for by specialty drugs from 2012 to 2021.

Methods: In this repeated cross-sectional study, we used data from the Centers for Medicare & Medicaid Services Part D Drug Spending Dashboard to investigate the time trends in total gross spending, prescriptions claims, and the average cost of a prescription claim for Part D drugs. We assessed the concentration based on the share of total gross spending and prescriptions by the drugs with the top 1%, 5%, and 10% of the highest spending and Lorenz curves and Gini coefficients. In addition, we stratified our analyses by specialty and nonspecialty drugs.

Results: Over the last 10 years, total gross drug spending in Medicare Part D increased by 103.5%, with a compounded annual growth rate of 8.2%. This change was driven by both increases in prescription claims and price increases of existing drugs to a similar degree. The concentration of spending intensified, with the top 1% of drugs accounting for an escalating share of total spending (from 31.4% to 41.1%). Over the 10-year study period, these top-spending drugs accounted for 5.6% of prescriptions but 34.6% of spending. Lorenz curves and increased Gini coefficients similarly showed that a smaller number of drugs accounted for increased spending over the study period. Specialty drug spending increased by 566.5%, with a compounded annual growth rate of 23.5%. The share of total spending on specialty drugs increased from 21.7% in 2012 to 71.1% in 2021. In 2021, specialty drugs accounted for 6.2% of prescriptions but 71.1% of total spending.

Conclusions: Medicare Part D gross drug spending became increasingly more concentrated from 2012 to 2021, which was especially pronounced for specialty drugs. Increases in prices for specialty and other brand-name drugs will likely continue to drive gross spending upward. Although the Inflation Reduction Act provisions will likely reduce net spending on selected drugs, other policy changes may be warranted.