What Drives Spending and Utilization on Medicaid Drug Benefits in States?

Table A2: Central Nervous System Agent Spending and Utilization by Subclass, 2010-2012
	Rx in Thousands				Medicaid Amount Reimbursed in Millions  (not including rebates)
Drug Subclass	2010	2011	2012		2010	2011	2012
Analgesics and Antipyretics	58,730	68,285	65,341		$1,579	$1,781	$1,697
Anorexigenic Agents and Respiratory and CNS Stimulants	11,366	13,864	14,322		$1,550	$2,062	$2,176
Anticonvulsants	21,842	24,793	25,553		$1,190	$1,322	$1,317
Antimanic Agents	858	935	923		$17	$18	$16
Antimigraine Agents	988	1,183	1,182		$132	$133	$117
Antiparkinsonian Agents	2,234	2,493	2,513		$62	$55	$51
Anxiolytics, Sedatives, and Hypnotics	23,960	26,570	26,093		$374	$387	$345
Central Nervous System Agents, Misc	1,575	2,154	2,348		$264	$392	$474
Fibromyalgia Agents	79	113	90		$8	$13	$12
General Anesthetics	61	68	76		$5	$6	$7
Opiate Antagonists	67	80	84		$9	$13	$15
Psychotherapeutic Agents	41,438	46,984	46,018		$5,831	$6,865	$5,802
Source: CMS Drug Utilization Data, 2010-2012; Wolters Kluwer Master Drug Database, Version 2.5, 3/1/2013

Appendix B: Methodology

For our analysis of Medicaid drug trends, we used 2010-2013 State Drug Utilization Data merged with Wolters Kluwer Master Drug Data Base Version 2.5 (MDDB, V2.5). The State Drug Utilization Data is publicly available data used as part of the Medicaid Drug Rebate Program (MDRP). It provides data on the number of prescriptions, Medicaid spending, and cost-sharing for rebate-eligible Medicaid outpatient drugs at the National Drug Code (NDC) level. The MDDB provides pricing and product information for drug products. We used the State Drug Utilization Data available as of September 2013 and the MDDB, V2.5 from March 2013.

We merged the State Drug Utilization Data and the MDDB at the NDC-level to incorporate brand versus generic status and the American Hospital Formulary Service (AHFS) Therapeutic Class Code. We classified single-source; single-source, co-licensed; and multi-source, originator drugs all as brand drugs. Because there is no official definition of a specialty drug, we compiled a list of drugs that a variety of managed care organizations and pharmacy benefit management service organizations¹ classified as specialty drugs.

We looked at the data in the 2010 to 2012 time frame. Only fee-for-service drugs were eligible for rebates through the MDRP until May 23, 2010, and as a result the State Drug Utilization Data prior to 2010 only reflected fee-for-service drugs until 2010. We used data from 2010 on, which includes both fee-for-service and managed care. There were a handful of quarters for states that had either missing or unreliable state drug utilization data between 2010 and 2012.² For those quarters, we trended the spending and utilization data for each of the analyses by state using data for that state in the surrounding quarters.

Limitations

An important caveat is that the State Drug Utilization Data does not include rebates, which have a considerable effect on Medicaid drug spending.³  In addition to utilization data, rebates are calculated using manufacturer pricing data that is not available to the public, and as a result, it is difficult to obtain this information at the NDC-level.

Medicaid beneficiaries largely self-administer drugs they obtain in an outpatient setting, however it is necessary for physicians or other medical practitioners to administer some drugs. Although physician-administered outpatient drugs have always been included in the MDRP, a 2004 OIG report found that in 2001, only 17 states collected rebates for these drugs.⁴ The Deficit Reduction Act of 2005 specifically required states to collect manufacturer rebates on certain claims for physician-administered drugs, including all single-source drugs and the top 20 multiple-source (generic) drugs ranked by expenditures. States can collect rebates on other multiple-source drugs administered by physicians, and CMS encouraged them to do so. However, another survey by the U.S. Department of Health and Human Services Office of Inspector General found that about one-quarter of state Medicaid programs (13 of 49 responding) did not meet the mandated requirements as of early 2009.⁵ Coordination of outpatient drug benefits and physician-administered drugs covered under the medical benefit raises another set of issues for states, including choices about coverage of specific drugs under either the outpatient drug benefit or medical benefit part of the program. Many drugs that states classify as specialty drugs require a physician to administer or supervise dosing. Thus, we may not be capturing all specialty drugs in our analysis.  In addition, states may be missing out on rebates for these specialty drugs.