The influence of Medicare Part D on the list pricing of brand drugs |
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| Authors: | Benedic N Ippolito PhD Joseph F Levy PhD |
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| Institution: | 1. Economic Policy Studies, American Enterprise Institute, Washington, DC, USA;2. Department of Health Policy and Management, Johns Hopkins Bloomberg School of Public Health, Baltimore, Maryland, USA |
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| Abstract: | Objective To compare the Medicare Part D market share of brand drugs with their net-to-list price ratio. Data Sources and Study Setting SSR Health Brand Net Price Tool and Medical Expenditure Panel Survey, 2007–2019. Study Design For each drug, we calculated the ratio of net to list price and the percent of users that were Medicare-eligible. We compared these cross-sectionally in each year and estimated a difference-in-differences model comparing drugs with high or low Medicare market shares (MMS) after following changes to program incentives in 2010. Data Collection/Extraction Methods The sample included brand drugs without generic competitors appearing in both datasets. Principal Findings Net-to-list price ratios were negatively correlated with MMS in the later years of our sample. In 2019, a 10% increase in MMS was associated with a significant 4.6% 95% CI: 2.1%, 7.1%] decrease in net-to-list ratio. Difference-in-differences showed net-to-list price ratios of drugs with above median MMS fell relative to those with below median MMS. By 2019, we observe an absolute reduction of ?0.2 95% CI: ?0.29, ?0.11], representing 28% reduction relative to the average ratio in 2010. Conclusions Greater exposure to the Medicare Part D market was associated with larger differences between net and list prices of drugs. |
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