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Utilization and Spending Trends in Medicaid Outpatient Prescription Drugs

Issue Brief
  1. Kaiser Family Foundation analysis of National Health Expenditure Accounts for calendar year 2017, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.html.

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  2. “Medicaid Payment for Outpatient Prescription Drugs,” (Washington, DC, MACPAC, May 2018), https://www.macpac.gov/wp-content/uploads/2015/09/Medicaid-Payment-for-Outpatient-Prescription-Drugs.pdf.

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  3. Katherine Young and Rachel Garfield, “Snapshots of Recent State Initiatives in Medicaid Prescription Drug Cost Control,” (Washington, DC: Kaiser Family Foundation, February 2018), https://www.kff.org/medicaid/issue-brief/snapshots-of-recent-state-initiatives-in-medicaid-prescription-drug-cost-control/.

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  4. Brian Bruen and Katherine Young, What Drives Spending and Utilization on Medicaid Drug Benefits in States, (Washington, DC: Kaiser Family Foundation, December 2014), http://files.kff.org/attachment/brief-what-drives-spending-and-utilization-on-medicaid-drug-benefits.

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  5. 42 USC § 1396r-8(a)(1).

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  6. “Medicaid Drug Rebate Program,” CMS, https://www.medicaid.gov/medicaid/prescription-drugs/medicaid-drug-rebate-program/index.html.

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  7. MACStats: Medicaid and CHIP Data Book, MACPAC, December 2018, “Exhibit 28: Medicaid Gross Spending and Rebates for Drug by Delivery System, FY 2017 (millions)”, https://www.macpac.gov/wp-content/uploads/2018/12/December-2018-MACStats-Data-Book.pdf.

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  8. Since January 1, 2006, Medicare has provided outpatient drugs to its beneficiaries, including Medicare and Medicaid dual enrollees through Medicare Part D.

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  9. See “Medicaid Expansion: Behavioral Health Treatment Use in Selected States in 2014,” GAO, June 2017, https://www.gao.gov/products/GAO-17-529.

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  10. “Medicaid Enrollment and Spending on HIV/AIDS, FY 2013,” Kaiser Family Foundation State Health Facts, https://www.kff.org/hivaids/state-indicator/enrollment-spending-on-hiv/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.

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  11. “Medicaid and HIV,” October 2016, Washington, DC: Kaiser Family Foundation, https://www.kff.org/hivaids/fact-sheet/medicaid-and-hiv/.

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  12. U.S. Congress, Senate, Committee on Finance, The Price of Sovaldi and Its Impact on the U.S. Health Care System, 114th Congress, 1st session, 2015, http://www.finance.senate.gov/imo/media/doc/1%20The%20Price%20of%20Sovaldi%20and%20Its%20Impact%20on%20the%20U.S.%20Health%20Care%20System%20(Full%20Report).pdf.

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  13. In December 2013, the FDA approved Gilead Sciences’ breakthrough drug Sovaldi, which essentially cures certain genotypes of hepatitis C with few side effects. Since then, the FDA has approved additional hepatitis C drugs from Gilead and three other companies, and all genotypes of hepatitis C are now essentially curable. Although some states are now reporting that they are able to secure meaningful supplemental rebates due to competition, the price of the hepatitis C drugs were initially prohibitively expensive, even with the statutory rebate. Kathleen Gifford, Eileen Ellis, Barbara Coulter Edwards, Aimee Lashbrook, Elizabeth Hinton, Larisa Antonisse, Robin Rudowitz, States Focus on Quality and Outcomes Amid Waiver Changes: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2018 and 2019, (Washington, DC: Kaiser Family Foundation, October 2018), https://www.kff.org/medicaid/report/states-focus-on-quality-and-outcomes-amid-waiver-changes-results-from-a-50-state-medicaid-budget-survey-for-state-fiscal-years-2018-and-2019/.

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  14. For non-elderly adults opioid addiction rates by insurance status, see Julia Zur, 6 Things to Know about Uninsured Adults with Opioid Addiction, (Washington, DC, Kaiser Family Foundation, May 2017), https://www.kff.org/uninsured/fact-sheet/6-things-to-know-about-uninsured-adults-with-opioid-addiction/. For discussion of opioid addiction among the elderly, see, e.g., Joe Davidson, “Unseen face of the opioid epidemic: drug abuse among the elderly grows,” Washington Post, May 25, 2018, https://www.washingtonpost.com/news/powerpost/wp/2018/05/25/unseen-face-of-the-opioid-epidemic-drug-abuse-among-the-elderly-grows/?utm_term=.3badd9bd9fde.

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  15. Buprenorphine, Naltrexone, and Methadone are drugs used in Medication Assisted Treatment for opioid addiction. Buprenorphine and Methadone are both classified as Opioid Analgesics, as they both also treat pain. However, Methadone is only prescribed when used to treat pain, and is administered when used to treat addiction. As a result, the methadone prescriptions in the SDUD are presumed to be for the treatment of pain. Naltrexone is classified as an Antidote and Specific Antagonist. See Lisa Clemans-Cope, Marni Epstein, and Genevieve M. Kenney, “Rapid Growth in Medicaid Spending on Medications to Treat Opioid Use Disorder and Overdose,” (Washington, DC, Urban Institute, June 2017), https://www.urban.org/sites/default/files/publication/91521/2001386-rapid-growth-in-medicaid-spending-on-medications-to-treat-opioid-use-disorder-and-overdose_3.pdf.

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  16. “Insulin: A Lifesaving Drug Too Often Out of Reach,” Congressional Diabetes Caucus, November 2018, https://diabetescaucus-degette.house.gov/sites/diabetescaucus.house.gov/files/Congressional%20Diabetes%20Caucus%20Insulin%20Inquiry%20Whitepaper%20FINAL%20VERSION.pdf.

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  17. Insulin is a biologic drug that has been regulated as a small molecule drug. In March 2020, it will be regulated as biologic drug, which will allow for manufacturers to produce insulin biosimilars. “FDA ‘Confident’ that Interchangeable Insulin Will Be Available After March 2020,” FDANews Drug Daily Bulletin, December 21, 2018, https://www.fdanews.com/articles/189628-fda-confident-that-interchangeable-insulin-will-be-available-after-march-2020.

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  18. Nicholas Florko, “Gottlieb blasts high insulin prices, touts far-off new rules he says will spur competition in that market,” Stat News, December 11, 2018, https://www.statnews.com/2018/12/11/gottlieb-blasts-high-insulin-prices-touts-new-rules/.

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  19. The price doubled since 2012, having previously tripled between 2002 and 2013. “Insulin: A Lifesaving Drug Too Often Out of Reach,” op. cit.

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  20. Ed Silverman, “Bernie Sanders calls for federal investigation of insulin makers for price collusion,” Stat News, November 3, 2016, https://www.statnews.com/2016/11/03/sanders-insulin-investigation/.

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  21. Medicaid Drug Utilization Review State Comparison/Summary Report FFY 2014 Annual Report, Prescription Drug Fee-For Service Programs, CMS, September 2015, https://www.medicaid.gov/medicaid-chip-program-information/by-topics/prescription-drugs/downloads/2014-dur-summary-report.pdf; Medicaid Drug Utilization Review State Comparison/Summary Report FFY 2015 Annual Report, Prescription Drug Fee-For-Service Programs, CMS, December 2016, https://www.medicaid.gov/medicaid-chip-program-information/by-topics/prescription-drugs/downloads/2015-dur-summary-report.pdf; Medicaid Drug Utilization Review State Comparison/Summary Report FFY 2016 Annual Report, Prescription Drug Fee-For-Service Programs, CMS, October 2017, https://www.medicaid.gov/medicaid-chip-program-information/by-topics/prescription-drugs/downloads/2016-dur-summary-report.pdf; Medicaid Drug Utilization Review State Comparison/Summary Report FFY 2017 Annual Report, Prescription Drug Fee-For-Service Programs, CMS, October 2018, https://www.medicaid.gov/medicaid/prescription-drugs/downloads/drug-utilization-review/2017-dur-summary-report.pdf. See also “Attachment 4 – Generic Drug Substitution Policies” in state DUR Reports, https://www.medicaid.gov/medicaid/prescription-drugs/drug-utilization-review/annual-reports/index.html.

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  22. Of the states that required more the restrictive requirements, a majority required preauthorization to enable a pharmacist to provide a brand drug when a generic was available. States included other requirements, such as requiring the submission of a MedWatch Form and requiring a medical reason to override the use of a generic, and some implement more than one restrictive requirement. Ibid.

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  23. “Medicine Use and Spending in the U.S: A Review of 2017 and Outlook to 2022,” IQVIA Institute for Human Data Science, April 2018, https://www.iqvia.com/-/media/iqvia/pdfs/institute-reports/medicine-use-and-spending-in-the-us-a-review-of-2017-and-outlook-to-2022.pdf?_=1542647406341, p. 7.

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  24. A manufacturer obtains FDA licensing for a biologic through a Biologics License Application (BLA) as opposed to an NDA or an ANDA. See Judith Johnson, “Biologics and Biosimilars: Background and Key Issues,” Congressional Research Services, Updated October 27, 2017, https://crsreports.congress.gov/product/pdf/R/R44620.

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  25. Ibid.

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  26. See Andrew Mulcahy, Zachary Predmore, and Soeren Mattke, “The Cost Savings Potential of Biosimilar Drugs in the United States,” (Rand Corporation, 2014), https://www.rand.org/content/dam/rand/pubs/perspectives/PE100/PE127/RAND_PE127.pdf.

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  27. Gifford, Ellis, Edwards, Lashbrook, Hinton, Antonisse, Rudowitz, op. cit.

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  28. Ibid.

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  29. “Insulin: A Lifesaving Drug Too Often Out of Reach,” op. cit. See also Ed Silverman, “Senators press insurers for reams of pricing and rebate info on insulin,” Stat News, November 21, 2018, https://www.statnews.com/pharmalot/2018/11/21/senators-insulin-letters-pricing-rebates/.

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  30. Silverman, 11/21/18, op. cit.

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  31. Young and Garfield, op. cit.

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  32. Jennifer Reck, “Oklahoma Signs the Nation’s First State Medicaid Value-Based Contracts for Rx Drugs,” September 25 2018, NASHP, https://nashp.org/oklahoma-signs-first-medicaid-value-based-contracts-for-rx-drugs/.

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  33. Carolyn Y. Johnson, “Louisiana adopts ‘Netflix’ model to pay for hepatitis C drugs,” Washington Post, January 10, 2019, https://www.washingtonpost.com/health/2019/01/10/louisiana-adopts-netflix-model-pay-hepatitis-c-drugs/?utm_term=.b962a75edc5d.

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  34. “Patient Affordability Value and Efficiency Act,” https://www.cassidy.senate.gov/imo/media/doc/PAVE%20Act.pdf.

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  35. Beginning in June 2017, the FDA has maintained a list of off-patent, off-exclusivity drugs lacking generic competition. Also in June 2017, the FDA announced it would expedite ANDA reviews until there were three generics on the market for a given brand. The agency is also intending on issuing guidance in the future addressing other activities that diminish generic competition. “FDA Tackles Drug Competition to Improve Patient Access,” FDA News Release, June 27, 2017, https://www.fda.gov/newsevents/newsroom/pressannouncements/ucm564725.htm and Henry Waxman, Bill Corr, Kristi Martin, Sophia Duong, “What Commissioner Gottlieb’s FDA is Doing to Lower Prescription Drug Prices and Steps Congress Can Take to Help,” April 2018, https://www.commonwealthfund.org/sites/default/files/documents/___media_files_publications_issue_brief_2018_apr_waxman_gottlieb_plan_fda_ib.pdf.

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  36. Aware of the importance of biologics when considering drug costs, the FDA released the “Biologics Action Plan” in July 2018, which includes items such as providing guidance to improve biosimilar labeling and to provide clarity for manufacturers to demonstrate interchangeability, as well as providing education to health care professionals to explain concepts such as biosimilars and interchangeability “Biosimilars Action Plan: Balancing Innovation and Competition,” FDA, July 2018. See also “FDA Releases Biosimilar Action Plan,” http://www.centerforbiosimilras.com/news/fda-releases-biosimilar-action-plan.

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  37. Zachary Brennan, “FDA Sets Record for Number of Generic Drug Approvals Again,” October 11, 2018, https://www.raps.org/news-and-articles/news-articles/2018/10/fda-sets-record-number-of-generic-drug-approvals-a.

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Appendices
  1. Copyright 2018, Wolters Kluwer Clinical Drug Information, Inc.

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  2. “CDER List of Licensed Biological Products,” FDA, Center for Drug Evaluation and Research, accessed March 2018, http://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/TherapeuticBiologicApplications/Biosimilars/ucm411418.htm “CBER List of Licensed Biological Products” FDA, Center for Biologics Evaluation and Research, accessed March 2018, http://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/TherapeuticBi ologicApplications/Biosimilars/ucm411418.htm.

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  3. “State Drug Utilization Data (SDUD) FAQs,” CMS, https://www.medicaid.gov/medicaid/prescription-drugs/state-drug-utilization-data/state-drug-utilization-data-faq/index.html.

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  4. “States Collection of Medicaid Rebates for Physician Administered Drugs,” (Washington, DC, U.S. Department of Health and Human Services- Office of Inspector General, June 2011), http://oig.hhs.gov/oei/reports/oei-03-09-00410.pdf.

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