Medicaid is one of the country’s biggest payers for prescription drugs, but because prescription drugs have accounted for a small share of total Medicaid spending, Medicaid’s pharmacy benefit policies have not been at the top of mainstream healthcare policy debate. However, with the approval of new specialty drugs, such as the Hepatitis C treatment Sovaldi, states are mindful that the price tag for the Medicaid drug program could increase significantly. While states have implemented many cost-saving policies targeting their Medicaid prescription drug benefits, there remains room for additional cost savings, better management, and improved health outcomes. To ensure appropriate policy for this central benefit and achieve these goals, it is important to understand which drugs are most frequently prescribed and which drive spending.

Using state drug utilization data, as well as an industry drug database, this issue brief examines trends in Medicaid drug prescriptions and drug spending before rebates from 2010 through 2012.¹   As part of the Medicaid drug benefit, manufacturers provide rebates to the state and federal government. However, rebates are based on proprietary data and they are not available to the public at the drug level. As a result we are unable to include them, or use this data to calculate total Medicaid drug spending. After presenting this analysis, we place these findings in the context of policy discussions. Key findings of the analysis include:

• Comprising 35% of prescriptions and 34% of spending before rebates in 2012, Central Nervous System Agents, a class of drugs that include pain killers, antidepressants, and antipsychotics, constitute the largest share of Medicaid drug utilization and spending. Within this drug class, pain killers and fever reducers represent a third of utilization.
• Specialty drugs account for just two percent of drug utilization in 2012, but they comprise 28% of drug spending. This share increased from 2010 when they totaled 24% of drug spending before rebates. The specialty drug share of total drug spending varies at the state level.
• Brand-name drugs account for a disproportionate amount of drug spending. In 2012, they accounted for 20% of Medicaid drug prescriptions but 76% of spending. In the past three years, the share of Medicaid drugs that are generic has risen slightly, possibly due to a number of blockbuster brand drugs losing their exclusivity and facing generic competition in the past several years.

Introduction

Medicaid is one of the country’s biggest payers for prescription drugs² , but because prescription drugs account for only about 5 percent of total Medicaid spending³ , Medicaid’s pharmacy benefit policies have not been at the top of mainstream healthcare policy debate. However, with the approval of new specialty drugs, such as the Hepatitis C treatment Sovaldi, states are mindful that the price tag for the Medicaid drug program could increase significantly. While states have implemented many cost-saving policies targeting their Medicaid prescription drug benefits, there remains room for additional cost savings, better management, and improved health outcomes.⁴  In order to create policy to reach these goals, it is fundamental to understand what the most frequently prescribed drugs are and what drugs are driving spending. In this paper, we first provide a background for understanding the Medicaid drug benefit.  Then we analyze recent spending and utilization trends by drug class, specialty drug status, and brand or generic status. Finally, we discuss some of the policy implications of these findings. A detailed explanation of the data and methods underlying the analysis is available in Appendix B at the end of the brief.

Background

In 1991, Congress created the Medicaid Drug Rebate Program to control the rising cost of the prescription drug benefit in the Medicaid program. In return for Medicaid reimbursement for their prescription drugs, it requires that all manufacturers enter into rebate agreements with the Secretary of Health and Human Services.⁵  Prior to the Affordable Care Act of 2010, the Drug Rebate Program prohibited the collection of federally-mandated rebates from manufacturers for drugs dispensed to beneficiaries enrolled in managed care plans if the health plans paid for those drugs out of their capitated rates. Consequently, many states chose to “carve out” pharmacy benefits from the package of services included in managed care and pay for drugs on a fee-for-service basis so that the state could capture the rebates directly. However, the ACA changed the rules for the rebate program, requiring manufacturers to pay the standard Medicaid rebate amount for drugs paid for by managed care plans in addition to the traditional fee-for-service claims. This change has prompted some states that utilized a carved-out approach for outpatient drug services to switch to a carved-in approach.⁶   Drug rebates offset a sizable share of gross Medicaid drug spending: in FY 2010, rebates recouped 42% of outpatient fee-for-service drug spending.⁷ 

Over half of Medicaid fee-for-service drug expenditures before rebates in FY 2010 were for individuals with disabilities.⁸  Medicaid also spends more money before rebates on individuals with disabilities at the recipient level than any other eligibility group. Persons with disabilities tend to have complex health needs including physical, behavioral or cognitive ailments that lead to long-term use of drug therapies. They also tend to be older (ages 45 and up), and increasing age is associated with greater use of prescription drugs.  Medicaid spends relatively little on outpatient prescription drugs for persons aged 65 and older, as they predominately receive prescription drugs through Medicare. Children, pregnant women, and other caretaker adults enrolled in Medicaid tend to use prescription drugs more for shorter-term, acute illnesses. Although Medicaid spends more money for prescription drugs on individuals with disabilities than other eligibility groups, prescription drug spending has grown the fastest for adults over the FY 2007 to 2010 period.⁹  This is in large part due to enrollment growth within the adult eligibility group during this period, which in turn, is in large part due to the recession and slow recovery.¹⁰  However, despite this growth within the adult eligibility group, and despite the Medicaid enrollment growth, total Medicaid spending for prescribed drugs has remained relatively stable.¹¹  Reasons for the slow growth in Medicaid drug expenditures include states’ emphasis on promoting the use of generic drugs; the introduction of many newly available, generic versions of blockbuster brand-name medications; increases in manufacturer rebates, as required by the Affordable Care Act; and other cost containment efforts implemented by states.¹² 

Despite the historically low growth rates of expenditures in recent years, federal and state Medicaid administrators continue to see prescription drug spending as an area where substantial savings could be achieved while continuing to meet enrollee health needs. Pressures to restrain the growth of Medicaid spending have long existed for states and the federal government, due to overall health care cost growth that exceeds inflation. These pressures were exacerbated by the 2007-2009 recession and its slow recovery. Reimbursement to pharmacies for prescribed drugs, including ingredient costs and dispensing fees, is an area of ongoing concentration for states and the federal government.¹³  Administrators are also looking for ways to better manage drug benefits, such as reconsidering managed care “carve outs” and adopting more stringent authorization and review strategies. Consistent with trends across the health insurance marketplace, administrators also are reexamining cost sharing requirements. Final rules issued by CMS in July 2012 allow states to apply higher cost-sharing amounts for certain Medicaid-covered drugs.¹⁴ 

Government projections point to rapid escalation in Medicaid drug expenditures in the near future.¹⁵  Factors expected to contribute to higher growth include increases in enrollment due to Medicaid coverage expansions authorized by the Affordable Care Act; continued growth in use and costs of specialty drugs; and fewer new generic drugs entering the marketplace to temper the long-term upward trend of increasing per unit drug costs (e.g. due to price increases for existing drugs and introduction of new drugs at relatively higher prices). Medicaid administrators are reassessing the ways that federal and state rules affect the use of and costs for prescribed drugs, in light of these trends.

Trends in Drug Spending and Utilization

Spending and Utilization by Drug Class

Using drug classes defined by the American Hospital Formulary Service,¹⁶  we found that Central Nervous System (CNS) Agents were the largest drug class of Medicaid prescriptions in 2010, 2011, and 2012, both in terms of number of prescriptions and total spending (Figure 1 and Figure 3). This class of drugs accounted for over a third of total prescriptions and over a third of total spending in each of those years (Appendix Table A1). The Central Nervous System Agents class of drugs has 12 subclasses that encompass a range of drugs, but most of the use and spending concentrates in five of them (Figure 2 and Appendix Table A2).¹⁷  The text box below summarizes these five subclasses.

Because the CNS class encompasses so many different types of drugs, we examine this class at the subclass level. Analgesics, or painkillers, are the most commonly used drugs worldwide, so the fact that CNS drugs account for most Medicaid prescription drugs and drug spending is not surprising. There are numerous generic options within this subclass, contributing to its lower rank in terms of total expenditures.

Similarly, the high levels of use of CNS Agents is consistent with Medicaid’s position as the largest source of funding for mental health and substance abuse services in the United States, together referred to as behavioral health services.¹⁸ 

Other classes that account for a large number of prescriptions include Anti-Infective Agents, Cardiovascular Drugs (used to treat high blood pressure and high cholesterol), Hormones and Synthetic Substitutes (frequently used to treat diabetes and auto-immune diseases, as well as to prevent pregnancies), Autonomic Drugs (frequently used to treat asthma and muscle spasms) and Gastrointestinal Drugs (Figure 1). These classes include treatments for many different acute illnesses and chronic conditions and are not unusual to see at or near the top of lists of high-use classes in any insurance program.

Most of these high-use classes also show up at the top of the list of classes ranked by Medicaid expenditures (Figure 3), but the high expenditure list also includes small-to-moderate use classes such as Blood Formation, Coagulation & Thrombosis (used for treating and preventing blood clots); Miscellaneous Therapeutic Agents; and Antineoplastic Agents (used for chemotherapy). These classes contain large numbers of drugs used to treat a wide range of conditions, but a common theme among them is that they include relatively high percentages of biologic and specialty drugs, contributing to high average costs per prescription.

Spending and Utilization for Specialty Drugs

While there is no universally accepted definition of specialty drugs and Medicaid programs use varying definitions, products designated as specialty drugs tend to require either difficult or unusual medication delivery, or complex treatment maintenance.¹⁹   Price is also frequently considered an indicator of specialty drugs, but some argue that price alone generally should not be used to define this type of drug.²⁰ 

We find that specialty drugs account for a disproportionate amount of drug spending. Between 2010 and 2012, specialty drugs accounted for 2 of total prescriptions, but they accounted for about a quarter of total Medicaid drug spending before rebates (Figure 4). Additionally, specialty drugs’ share of total Medicaid spending on drugs grew from 24 percent in 2010 to 28 percent in 2012. As shown in Figure 5, there is variation at the state level in the share of total Medicaid drug spending that specialty drugs comprise, ranging from a low of 16 percent in Kentucky to a high of 39 percent in the District of Columbia.²¹ 

Spending and Utilization for Brand vs Generic Drugs

A generic drug is equivalent to a brand drug (also known as an “innovator” drug) in “dosage form, strength, route of administration, quality, performance characteristics, and intended use,” but it is often sold at a lower price.²²  The generic dispensing rate of total Medicaid prescriptions has increased from 74 percent in 2010 to 80 percent in 2012.  Consequently, the generic share of total Medicaid drug spending has also increased slightly from 20 percent in 2010 to 24 percent in 2012 (Figure 6). The generic share of total Medicaid drug spending varies from state to state, ranging from 13 percent in Rhode Island to 41 percent in Alaska (Figure 7). Although it is argued that dramatic savings could be achieved if all states could reach the generic dispensing rates in states such as Virginia or Alaska, it is important to remember that many factors may influence these rates. Each state has different mixes of patients by age, race, gender, disability, managed care participation, and other factors known to influence the numbers and types of prescriptions dispensed.

Discussion

Managing Medicaid prescription drug benefits is a balancing act between prices, rebates, and use.  Policy makers aim to provide the necessary prescription drugs to those who need them while still being mindful of Medicaid spending and cost constraints. In recent years, states have emphasized promoting the use of generic drugs.²³  These efforts take many forms including reduced (or no) cost sharing for patients when using generic drugs, higher dispensing fees or other incentives for pharmacists when dispensing generics, and physician education and feedback efforts by third-party payers and other groups (e.g., counter detailing, prescribing analyses). Economic factors played a role in encouraging more generic use, as Medicaid programs and patients sought relief from financial pressures stemming from the economic recession of 2007-2009 and the slow pace of economic recovery in its wake. Additionally, especially in 2011 and 2012, a large number of patents for blockbuster drugs expired. ²⁴  Frequently deemed the “patent cliff,” this brought competition from lower-priced generics.

Policy makers are also vigilant of the high usage rates of certain classes of drugs. As described earlier, analgesics and antipyretics are the most commonly prescribed subclass within the Central Nervous System class of drugs. Use of opioids, which fall within this subclass, is an area of continued vigilance for Medicaid because opioids are the most commonly “diverted” drugs – that is, legally obtained, but subsequently used for illegal, and typically not medically necessary, reasons.²⁵  Policy makers are also mindful of the high usage of behavioral health drugs, focusing on rates of off-label use; polypharmacy; appropriate dosage; use by very young children (< 6) and children in foster care; and prescribing patterns in nursing homes.²⁶  One approach used by states has been to support evidence-based reviews to assess the extent to which drugs within a class may be interchangeable and to inform decisions about the use of particular benefit management tools (e.g., adding or removing prior authorization requirements), to support patient or provider education efforts, and other activities intended to improve the appropriateness of drug therapies.

States are increasingly looking at ways to better manage high-use, high-cost beneficiaries. Small percentages of Medicaid beneficiaries are responsible for large shares of total program expenditures in each state, and the same is true for prescription drug benefits. These individuals tend to have multiple medical and/or mental health conditions. Although there are likely to be opportunities for significant cost savings among these patients by addressing issues such as polypharmacy, and inappropriate and sometimes dangerous prescribing, the challenge is focusing efforts in ways that avoid both overuse and underuse of prescription drugs and that also take into account potential effects beyond the drug benefit. Simply targeting these beneficiaries with the intent to cut drug spending may be counter-productive if the approaches used result in higher costs in other parts of the Medicaid budget. In some cases, it may be appropriate to spend more money on prescription drugs to try to avoid more costly care in the future, such as hospitalizations.

At the same time, policy makers grapple with the very real concern that some drugs, specialty drugs, are so expensive that widespread use of them would cause fiscal problems at the state and federal level. Sovaldi is one such specialty drug, which the FDA approved in December 2013 for the treatment of Hepatitis C. Its manufacturer, Gilead Sciences, has set the list price at $1,000 a pill for Sovaldi, with total costs coming to $84,000 for a standard 12 week course of treatment.²⁷  Sovaldi demonstrated cure rates above 90% in clinical trials without the side-effects found in other Hepatitis C treatments,²⁸  but its high cost is a serious cause of concern for all health insurance providers, especially Medicaid. Some estimates are reporting that Medicaid plans will be covering up to 30 percent of Sovaldi patients, generating costs of at least $1 billion this year.²⁹  In October 2014, the FDA approved Harvoni, another Hepatitis C treatment that is a fixed-dose combination tablet. It is priced comparably to Sovaldi when the latter is taken in combination with the other necessary antivirals approved as part of the treatment.³⁰  The rapid growth of expenditures for specialty drugs is a major area of focus for federal and state policymakers.

Conclusion

Medicaid drug utilization and spending are concentrated within certain types of drugs. Specialty drugs comprise a small share of utilization, but their relatively high price tag is a cause of great concern for Medicaid pharmacy directors. Most prescriptions are for generic drugs, but brand drugs dominate spending. Individuals in different eligibility groups have very different spending patterns. The vast majority of drug prescriptions are for drugs in the Central Nervous System class. These imbalances point to many of the issues with which Medicaid pharmacy directors are grappling. Looming largest on the horizon is the financial complications of the increased use of specialty drugs, which raise issues of management of complex drug regimens and difficult questions concerning return on investment. Sovaldi and its successor Harvoni are two examples of this type of drug, and there are likely to be many more in the future. States are approaching this challenge in a variety of ways. They are also faced with the task of managing the behavioral health needs of Medicaid beneficiaries while also addressing the significant total cost for central nervous system agents and concerns about overuse of these medications. At the same time, these trends underscore the importance of policy actions long in place, such as the continued emphasis on generic utilization, and the Medicaid Drug Rebate Program.

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 organizations³¹  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 2012.³²  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.³³   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.³⁴  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 2009.³⁵  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.

1. This report does not discuss ingredient cost reimbursement, except in the context of the Medicaid Drug Rebate Program.  Ingredient cost reimbursement is discussed in great detail in B. Bruen and K. Young, “Paying for Prescribed Drugs in Medicaid: Current Policy and Upcoming Changes” Kaiser Family Foundation, May 2014. Available at https://modern.kff.org/medicaid/issue-brief/paying-for-prescribed-drugs-in-medicaid-current-policy-and-upcoming-changes/. ↩︎
2. “National Health Expenditures” CMS. Available at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.html. ↩︎
3. Ibid. ↩︎
4. See V. Smith, S. Kramer, and R. Rudowitz, “Managing Medicaid Pharmacy Benefits: Current Issues and Options” Kaiser Family Foundation, September 2011. Available at https://modern.kff.org/medicaid/report/managing-medicaid-pharmacy-benefits-current-issues-and-options/. ↩︎
5. As part of the rebate program, manufacturers are required to report all covered drugs currently under their labeler code, as well the quarterly Average Manufacturer Price (AMP) for each National Drug Code (NDC). The drug rebate is calculated by statute and is based upon a lower-of formula involving AMP; what type of drug it is, including if it is a brand or a generic; the best price if it is a brand-name drug; and the Consumer Price Index-Urban. AMP is defined as the “average price paid to the manufacturer for the drug in the United States by wholesalers for drugs distributed to retail community pharmacies; and retail community pharmacies that purchase drugs directly from the manufacturer” with some exclusions (SSA Section 1927(k)(1)(A)). The NDC is a unique code that identifies each drug according to its labeler, strength, dosage form, package form, and package size. The best price is the lowest price paid by any payer. ↩︎
6. U.S. Department of Health and Human Services- Office of Inspector General. “States Collections of Rebates for Drugs Paid Through Medicaid Managed Care Organizations” (OEI-03-11-00480), September 2012. Available at http://oig.hhs.gov/oei/reports/oei-03-11-00480.pdf. ↩︎
7. Urban Institute estimate based on data from Medicaid Financial Management Reports (HCFA/CMS Form 64).  From K. Young, L. Clemans-Cope, E. Lawton, and J. Holahan. “Medicaid Spending Growth in the Great Recession and Its Aftermath, FY 2007-2012” Kaiser Family Foundation, July 2014. Available at https://modern.kff.org/medicaid/issue-brief/medicaid-spending-growth-in-the-great-recession-and-its-aftermath-fy-2007-2012/. ↩︎
8. Kaiser Commission on Medicaid and the Uninsured and the Urban Institute estimates based on data from FY 2007 through FY 2010 MSIS. Because 2010 data were unavailable, 2009 MSIS data were used for CO, ID, MO, NC, and WV, and then adjusted to 2010 CMS-64 spending levels. MSIS drug spending represents fee-for-service spending only. ↩︎
9. Ibid. ↩︎
10. See Young et al. ↩︎
11. “National Health Expenditures” ↩︎
12. V. Smith, K. Gifford, and R. Rudowitz, “Headed for a Crunch: An Update on Medicaid Spending Coverage and Policy Heading into an Economic Downturn” Kaiser Family Foundation, September 2008; V. Smith, K. Gifford, E. Ellis, R. Rudowitz, M. Watts, C. Marks, “The Crunch Continues: Medicaid Spending, Coverage and Policy in the Midst of a Recession: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2009 and 2010” Kaiser Family Foundation, September 2009; V. Smith, K. Gifford, E. Ellis, R. Rudowitz, L. Snyder, “Hoping for Economic Recovery, Preparing for Health Reform:  A Look at Medicaid Spending, Coverage and Policy Trends Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2010 and 2011” Kaiser Family Foundation, September 2010; V. Smith, K. Gifford, E. Ellis, R. Rudowitz, L. Snyder, “Moving Ahead Amid Fiscal Challenges: A Look at Medicaid Spending, Coverage and Policy Trends Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2011 and 2012” Kaiser Family Foundation, October 2011; V. Smith, K. Gifford, E. Ellis, R. Rudowitz, and L. Snyder, “Medicaid Today; Preparing for Tomorrow: A Look at State Medicaid Program Spending, Enrollment and Policy Trends Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2012 and 2013” Kaiser Family Foundation, October 2012; V. Smith, K. Gifford, E. Ellis, R. Rudowitz, and L. Snyder, “Medicaid in a Historic Time of Transformation: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2013 and 2014” Kaiser Family Foundation, October 2013. ↩︎
13. See Bruen and Young. ↩︎
14. Medicaid and Children’s Health Insurance Programs: Essential Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes, and Premiums and Cost Sharing; Exchanges: Eligibility and Enrollment; Final Rule. 78 Federal Register 135, 15 July 2013, pp. 42160-42322. ↩︎
15. See “National Health Expenditure Projections 2012-2022” Office of the Actuary in the Centers for Medicare & Medicaid Services. Available at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html. ↩︎
16. American Hospital Formulary Service drug classes are from the American Society of Health-System Pharmacists (www.ahfsdruginformation.com). We accessed them through the Wolters Kluwer Master Drug Data Base (Version 2.5). See Appendix B: Methodology for more details. ↩︎
17. As rebates at the drug level are not available to the public, we are unable to include rebates in this analysis. ↩︎
18. U.S. Department of Health and Human Services- Substance Abuse and Mental Health Services Administration. “Medicaid Handbook: Interface with Behavioral Health Services” 2013. Available at http://store.samhsa.gov/shin/content//SMA13-4773/SMA13-4773.pdf. ↩︎
19. D. Blaser, A. Lewtas, et al. “How to Define Specialty Pharmaceuticals – A Systematic Review” American Journal of Pharmaceutical Benefits, 2(6), 2010. See also Academy of Managed Care Pharmacy. “AMCP Format for Formulary Submission Guidelines”, version 3.1, December 2012. Available at http://www.amcp.org/practice-resources/amcp-format-formulary-submisions.pdf. ↩︎
20. The Academy for Managed Care Pharmacy acknowledges that price is frequently a consideration in definitions used by individual organizations, but does not include price in its definition and argues that price alone should not be used to define specialty drugs. ↩︎
21. Due to data quality issues, we have not calculated specialty drug shares in New Mexico, Rhode Island, and Texas. ↩︎
22. “Abbreviated New Drug Application (ANDA): Generics” Available at http://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ ApprovalApplications/AbbreviatedNewDrugApplicationANDAGenerics/ ↩︎
23. For other methods that states use to reduce drug spending see Smith, Kramer, and Rudowitz. ↩︎
24. CVS/Caremark. “Insights 2012” Available at http://www.cvscaremarkfyi.com/2012Insights. ↩︎
25. U.S. Department of Health and Human Services- Centers for Medicare & Medicaid Services. “Drug Diversion in the Medicaid Program: State Strategies for Reducing Prescription Drug Diversion in Medicaid” January 2012. Available at http://www.cms.gov/Medicare-Medicaid-Coordination/Fraud-Prevention/MedicaidIntegrityProgram/downloads/drugdiversion.pdf. ↩︎
26. See, for example, Government Accountability Office. “Children’s Mental Health: Concerns Remain about Appropriate Services for Children in Medicaid and Foster Care” December 2012. Available at http://www.gao.gov/assets/660/650716.pdf. ↩︎
27. J. Rockoff, “Sales Soar for Pricey Hepatitis Drug Sovaldi” The Wall Street Journal, March 31, 2014. Available at http://online.wsj.com/news/articles/SB10001424052702303978304579473273033614530. ↩︎
28. Ibid. ↩︎
29. B. Japsen, “At $1,000 a Pill, Hepatitis C Drug Sovaldi Rattles Medicaid Programs” Forbes, April 28, 2014. Available at http://www.forbes.com/sites/brucejapsen/2014/04/28/pricey-hepatitis-pill-sovaldi-rattles-medicaid-programs/. ↩︎
30. A. Pollak, “Harvoni, a Hepatitis C Drug From Giliead, Wins F.D.A. Approval” New York Times, October 10, 2014. Available at http://www.nytimes.com/2014/10/11/business/harvoni-a-hepatitis-c-drug-from-gilead-wins-fda-approval.html. ↩︎
31. We pulled formulary information from Aetna Specialty CareRx, BlueCross BlueShield of Rhode Island, CVS Caremark Specialty Pharmacy Services, Express Scripts, and Wellmark. ↩︎
32. The state drug utilization data for the following states and quarters was either missing or unreliable: Colorado 2011Q4, Hawaii 2012Q2-Q4, Indiana 2012Q3, North Dakota 2012Q4, Texas 2012Q1 and 2012Q3, Utah 2012Q1, Virginia 2010Q2-2010Q4. ↩︎
33. See “Medicaid Drug Rebate Program Data” Available at http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Benefits/Prescription-Drugs/Medicaid-Drug-Rebate-Program-Data.html. ↩︎
34. U.S. Department of Health and Human Services- Office of Inspector General. “Medicaid Rebates for Physician-Administered Drugs” (OEI-03-02-00660) September 2012. Available at http://oig.hhs.gov/oei/reports/oei-03-11-00480.pdf. ↩︎
35. U.S. Department of Health and Human Services- Office of Inspector General. “States Collection of Medicaid Rebates for Physician-Administered Drugs” (OEI-03-09-00410) June 2011. Available at http://oig.hhs.gov/oei/reports/oei-03-09-00410.pdf. States continue to face challenges carrying out these requirements: Providers may not report all of the information needed to support rebate claims; state systems may not accurately capture relevant information or may accept claims without complete documentation; and manufactures may challenge claims because of concerns over the accuracy of claims information. For example, see Nebraska Department of Health and Human Services. “Medicaid Drug Rebate Program – National Drug Code (NDC) Reporting Requirement for Physician Administered Drugs New Quantity Limits” Provider Bulletin No. 13-63.  September 5, 2013. Available at http://dhhs.ne.gov/medicaid/Documents/PB1363.pdf. ↩︎

In 2014, more than 16 million Medicare beneficiaries (30%) were enrolled in Medicare Advantage plans – private plans, such as HMOs or preferred provider organization (PPOs) that receive funds from the federal government (Medicare) to provide Medicare-covered benefits to enrollees. Under the current Medicare program, Medicare Advantage plans are offered as an alternative to the traditional Medicare fee-for-service program, and Medicare beneficiaries can enroll in a Medicare Advantage plan, change Medicare Advantage plans, or switch from Medicare Advantage to traditional Medicare during the annual open enrollment period. Federal payments to Medicare Advantage plans were gradually reduced by the Affordable Care Act of 2010 (ACA) with the goal of creating greater parity in payments between the traditional Medicare program and Medicare Advantage by 2017.¹ 

Beneficiaries will be able to choose from 18 Medicare Advantage plans, on average, in 2015, the same number of plans as in 2014. While some plans will leave the market in 2015, others are entering or expanding and most enrollees (over 95 percent) will be able to remain in their same plan in 2015 if they choose. About 480,000 beneficiaries – less than 5 percent of all enrollees – will need to find new plans because their 2014 plan will no longer be available in 2015.² 

Most beneficiaries (78 percent) will have access to zero-premium plans in 2015, though the emphasis on such plans could be declining. The average beneficiary who remains in the same Medicare Advantage plan in 2014 and 2015 will pay $41 per month, an increase of $7 per month, or 20 percent, on average; beneficiaries could avoid higher premiums by changing plans or decide that their current plan still is attractive despite the higher premium. All Medicare Advantage plans will include a limit on enrollees’ out-of-pocket expenses for services covered under Medicare Parts A and B, but the plans’ limits will be about $240 higher, on average, in 2015 than in 2014. Deductibles for Part D drug coverage will also increase, on average. These changes are consistent with historical trends, and indicate that Medicare Advantage plans can be expected to provide somewhat less financial protection in 2015 than they have historically.

This Data Spotlight, like those prepared by us in previous years, reviews trends in Medicare Advantage plan choices available to beneficiaries, premiums and other plan characteristics in 2015. The brief does not, however, analyze changes in benefits or cost sharing requirements for individual services, which could be major factors in an enrollee’s out of pocket expenses.³  Nor does it examine changes in provider networks that could affect beneficiaries’ access to preferred physicians and other health care providers. This spotlight is part of a series of spotlights tracking key changes in the Medicare Advantage program. The analysis is based on publicly available data from the Centers for Medicare and Medicaid Services (CMS).⁴ 

Plan Offerings in 2015

Number of Plans Offered

In total, 1,945 Medicare Advantage plans will be available nationwide for individual enrollment in 2015 (Exhibit 1), 69 fewer plans than were available in 2014 as the aggregate number of departing plans (378 plans) outnumber new entrants (309 plans; Exhibit 2).⁵ 

To a considerable extent, the decline in plans reflects the diminished role of PFFS plans in the Medicare Advantage marketplace since the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008, which required most PFFS plans to adopt provider networks. In 2015, 69 PFFS plans will be offered compared to 120 in 2014 and a high of 801 in 2008 (Table A1). The number of local PPOs offered will decline by 46 plans (from 511 in 2014 to 465 in 2015), and the number of regional PPOs will decline by 6 plans (from 48 in 2014 to 43 in 2015). In contrast, the total number of HMOs available for enrollment will increase from 1,242 plans to 1,275 between 2014 and 2015.

Earlier analysis provides detail on the nature of change at the national and state level as plans enter and depart the market in 2015.⁶  While virtually every state (except AK and WY) will have some change in plan offerings, most of the plans exiting the market had relatively few enrollees and most had average or below average quality star ratings.

Medicare beneficiaries will be able to choose from among 18 plans, on average, in 2015 – the same number of plans as in 2014 (Exhibit 3). Beneficiaries in metropolitan areas will be able to choose from 20 plans, on average, the same number of plans as in 2014. Beneficiaries in non-metropolitan areas will be able to choose from among 10 plans, on average, down one plan from 2014. The average number of plans available in the lowest cost counties will somewhat decrease from 17 plans to 15 plans while the average number of plans available in the highest cost counties will increase from 21 plans to 22 plans (Table A2).

Access to Medicare Advantage Plans

As in recent years, virtually all Medicare beneficiaries (99%) will continue to have access to a Medicare Advantage plan as an alternative to traditional Medicare (Exhibit 4). All beneficiaries in metropolitan areas (100%) and the vast majority of beneficiaries in non-metropolitan areas (97%) will continue to have access to one or more Medicare Advantage plans. In terms of choice, the main change between 2014 and 2015 is that fewer beneficiaries, particularly those in non-metropolitan areas, will have access to a PFFS plan in 2015.

Plan Premiums

People on Medicare have said that many factors are important to them when selecting their plan, including plans’ premiums, cost-sharing, extra benefits, prescription drug coverage, and provider networks.⁷  Premiums are the most visible and the easiest of these factors to compare, even though the other factors are also important as they affect beneficiaries’ out-of-pocket costs and access to providers. Medicare beneficiaries enrolled in Medicare Advantage plans pay the Part B premium like other beneficiaries (less any rebate provided by the Medicare Advantage plan). Medicare Advantage enrollees may also pay an additional monthly premium charged by the Medicare Advantage plan for plan benefits and prescription drug coverage. This analysis of premiums includes only Medicare Advantage plans that offer prescription drug coverage (MA-PDs), and excludes the minority of Medicare Advantage plans (14%) that do not cover prescription drugs, in order to better approximate apples-to-apples comparisons across plan types and years.

Monthly Premiums (Unweighted By Enrollment)

We first examined the change in premiums, without weighting them for plan enrollment, to show the changes plans are making and implications for average premiums in plans available to beneficiaries. The analysis includes plans with no premiums as well as plans with monthly premiums. In 2015, the average premium for MA-PDs (unweighted by plan enrollment) will be $53 per month – an increase of $2 from 2014 (Table A3). Premiums for HMOs will average $38 per month, up $3 from 2014. Similar to prior years, HMOs will continue to have lower premiums than regional PPOs ($68 per month), local PPOs ($81 per month) and PFFS plans ($88 per month). Regional PPOs will have the largest change in premiums, on average, in which average premiums will increase 14 percent, on average, from $59 per month in 2014 to $68 per month in 2015. In contrast, premiums for PFFS plans will decrease, on average, from $91 per month in 2014 to $88 per month in 2015.

Monthly Premiums (Weighted By Enrollment), Assuming Enrollees Remain in the Same Plan

Our second analysis of Medicare Advantage premiums examines the impact of premium changes among plans offered in both years, assuming enrollees remained in the same plan. These enrollee “weighted average” premiums are a clearer indication than unweighted premiums of the amount paid by the average Medicare Advantage enrollee because enrollment differs substantially across plans. Similar to the prior analysis, this analysis includes plans with no premiums as well as plans with monthly premiums.

The premiums for MA-PDs available in both years, weighted by 2014 enrollment, will be about $41 per month, an increase of $7 per month (or 20 percent) compared to 2014 (Exhibit 5). In 2015, as in previous years, monthly premiums for HMO enrollees will be lower than for all other plan types, on average, assuming beneficiaries stay in their same plan. Enrollees in local PPOs will pay more in monthly premiums than enrollees in other types of Medicare Advantage plans, and will face larger increases in premiums (in absolute dollar terms) than enrollees in HMOs, regional PPOs, and PFFS plans if they remain in the same plan, on average. Historically, actual average premiums, available after beneficiaries respond to new plan choices, have been lower than premiums shown in this analysis because beneficiaries tend to select lower premium plans, if they switch plans.⁸  We will analyze the premiums for plans selected by beneficiaries in 2015 after the open enrollment period.

In general, MA-PDs that will continue to be offered in 2014 had lower average premiums in 2014 (weighted by enrollment) than plans that are exiting the market in 2014 (Table A1). Plans remaining in the market had average premiums of $34 per month whereas plans exiting the market had average premiums of $52 per month. This pattern is true both in the aggregate and for most plan types, and suggests that these higher premium plans that are exiting the market were less competitive than the plans with lower premiums. As was true last year, PFFS plans are an exception to this pattern; the average premium for PFFS departing plans was slightly lower than the average premium for continuing plans in 2014 ($45 versus $47). Since plan premiums are a function of many factors (including benefits, cost-sharing, provider networks, local practice patterns, and payments from the Medicare program), interpreting differences in premiums by plan type is complex.⁹ 

Access to Plans with No Premium

Medicare Advantage plans with no additional premium other than the Medicare Part B premium – so called “zero premium plans” – have been a feature of the Medicare Advantage landscape for many years. Slightly more than three-quarters (78%) of all beneficiaries will have access to a zero-premium MA-PD in 2015 (Exhibit 6). This is a decline from 84 percent in 2014, and a high of 94 percent in 2009. However, despite declines in the availability of zero premium plans, our analysis has shown that historically the share of beneficiaries enrolled in zero-premium plans has remained relatively steady; since 2011, about half of all Medicare Advantage enrollees have been enrolled in a zero-premium MA-PD.¹⁰ 

As in past years, beneficiaries are most likely to have zero premium HMOs available. In 2015, 76 percent of beneficiaries will have access to at least one zero premium HMO, while a minority of beneficiaries will have access to zero-premium local PPOs (22%) and regional PPOs (14%); no zero-premium PFFS plans will be available.

Plan Availability and Premiums by Firm

While many organizations offer Medicare Advantage plans, a handful of firms and affiliates account for the majority of all Medicare Advantage enrollment in 2014.¹¹  We examine trends among and across these firms and affiliates that account for large shares of Medicare Advantage enrollment nationally: UnitedHealthcare, Humana, Blue Cross and Blue Shield (BCBS) affiliated companies (including Wellpoint BCBS plans), Kaiser Permanente, Aetna, Wellcare, and Cigna. The analysis accounts for the merger between Coventry and Aetna in late 2013 as well as other previous mergers.

Change in Number and Availability of Plans Offered By Firm

Nationally, these firms and affiliates dominate the plan offerings, and 60 percent of available plans will be offered by one of these firms or affiliates in 2015 (Table A4). The types of plans offered vary across these firms and affiliates, due to different business strategies and different markets in which they offer plans. Plan strategies are reflected both in the types of plans they offer and, taking service area into account, the share of beneficiaries to whom they are available (Exhibit 8, Table A5).

Humana. As in recent prior years, in 2015, Humana will be offering plans to a larger share of Medicare beneficiaries nationwide (86%), and will be offering a broader mix of plan types, than any other firm or affiliated companies. About half of all Humana Medicare Advantage plans in 2015 will be HMOs (49%) and about three in ten will be local PPOs (29%); PFFS plans comprise a much larger proportion (13%) of Humana’s plan offerings than other large firms’ offerings. In 2015, Humana HMOs, local PPOs, and regional PPOs will be available to more than half of beneficiaries (56%, 54%, and 61%, respectively) and Humana PFFS plans will be available to more than four in ten beneficiaries (44%). This means that, in many markets, Humana will be offering competing plans of different plan types.

UnitedHealthcare. UnitedHealthcare also has historically had a large Medicare Advantage footprint and it will continue to do so in 2015. More than two-thirds (69%) of Medicare beneficiaries will have access to a UnitedHealthcare plan in 2015. Like Humana, UnitedHealthcare’s offerings also reflect a diversified mix of plan types, but the firm relies more heavily on HMOs than other plan types. Eighty percent of UnitedHealthcare’s plans will be HMOs, with smaller share of other plan types offered, including local PPOs (13%), regional PPOs (5%), and PFFS plans (1%).

Blue Cross and Blue Shield Affiliates (BCBS). In contrast to Humana and UnitedHealthcare that are single companies (or groups of companies), BCBS affiliates originally were separate companies in individual states that are affiliated nationally. Today, such affiliated companies may cover multiple states and some have converted from non-profit to for-profit status, most notably Wellpoint with its acquisition of Anthem BCBS.¹²  We analyze the BCBS affiliates together because the affiliation results in some similarities in approach. In 2015, more than half of their Medicare Advantage offerings will be HMOs (57%) while 38 percent will be local PPOs. Nearly three out of four beneficiaries nationwide (71%) will have access to a BCBS affiliated plan, including 21 percent who will have with access to a Wellpoint BCBS plan and 58 percent who will have access to plans offered by other companies under the BCBS trademark. UnitedHealthcare, Humana, and BCBS affiliates are the only firms and affiliates that offer regional PPOs in 2015, as was also true in 2014.

Kaiser Permanente. Fewer beneficiaries (15%) will have access to a Kaiser Permanente plan than many other firms included in this analysis. Kaiser Permanente has historically been geographically concentrated but its plans tend to have many enrollees. In contrast to other firms that have diversified their Medicare Advantage offerings considerably since the mid-2000s, Kaiser Permanente only offers HMOs (87%) and cost plans, which are somewhat similarly structured. In 2015, Kaiser Permanente will offer fewer cost plans (5 plans in 2015 versus 14 plans in 2014), but the change will have relatively little impact on the total share of beneficiaries with access to a Kaiser Permanente plan.

Aetna. With its acquisition of Coventry, Aetna’s footprint in the Medicare Advantage market has expanded. Aetna historically was strong in the group market and the Coventry acquisition has strengthened its presence in the individual market.¹³  In 2015, Aetna plans will be available to 45 percent of all beneficiaries, up from 33 percent in 2014 prior to the acquisition. In 2015, Aetna HMOs and local PPOs will be available to 42 percent and 33 percent of beneficiaries, respectively; both Coventry and Aetna have offered only HMOs or local PPOs since the start of 2011.

Other Firms. About one-quarter (25%) and one-fifth (19%) of beneficiaries will have access to a plan offered by Wellcare and Cigna, respectively. Both firms heavily emphasize HMOs, with Wellcare exclusively offering HMOs and Cigna offering predominantly HMOs. Many other firms participate in the Medicare Advantage. Such companies are particularly relevant to HMO offerings, where they provide one or more options to 79 percent of beneficiaries.

Change in Plan Premiums By Firm

The firms and affiliates with the most Medicare Advantage enrollees have historically differed in how aggressively they have priced their products, over time and across markets. For instance, some may offer wider provider networks in exchange for higher premiums. Others provide more limited benefit expansion (beyond traditional Medicare benefits) in exchange for lower premium plans. As with our other analyses of premiums, this analysis of premiums by firm includes only MA-PDs, and excludes the Medicare Advantage plans that do not cover prescription drugs, in order to better approximate apples-to-apples comparisons.

As part of its strategy for retaining enrollment while reducing costs, UnitedHealthcare announced that for 2015 it introduced premiums across most of its plans that previously had zero-premiums. As premiums in these plans increased, UnitedHealthcare also is introducing new zero-premium plans with less generous benefits and/or higher cost-sharing.¹⁴  UnitedHealthcare has also stated that it will introduce more plans with narrow provider networks consisting of one hospital or health system. Overall, average premiums increased across all plan types offered by UnitedHealthCare, increasing from an average of $11 in 2014 to $27 in 2015 (Table A6).

Other companies will also have sizeable premium increases for some plan offerings. Average premiums for local PPOs offered by BCBS affiliates increased from $89 per month to $109 per month between 2014 and 2015; these premium increases occurred for BCBS plans offered by Wellpoint as well as other BCBS affiliates.

Limits on Out-of-Pocket Spending

The traditional Medicare program does not include a limit on out-of-pocket spending for services covered under Parts A and B, which is one reason most beneficiaries have supplemental coverage to limit their financial liability. Historically, Medicare HMOs provided beneficiaries with an alternative way to obtain comprehensive coverage and early (circa 1980s) plans had relatively limited cost sharing. With the growth of cost sharing in Medicare Advantage and its predecessor programs, out-of-pocket limits became increasingly important as a way for health plans to demonstrate their value to beneficiaries who might also be considering traditional Medicare, with or without supplemental coverage.

In 2006, when they were first authorized, regional PPOs were required by law to have a limit on out-of-pocket spending for benefits under Parts A and B. In 2010, more than three-quarters of plans (79%) of any type provided out-of-pocket spending limits as an extra benefit for enrollees.¹⁵  Beginning in 2011, CMS required all Medicare Advantage plans to include a limit on enrollees’ out-of-pocket expenses for services covered under Parts A and B (no more than $6,700 each year,), with higher limits allowed for services received out-of-network. CMS encouraged plans to limit enrollees’ out-of-pocket expenses to no more than $3,400 per year by allowing plans with lower out-of-pocket limits to charge higher cost-sharing for some services. These out-of-pocket limits do not include expenses for prescription drugs covered under Part D, which have a separate catastrophic cap ($4,700 in 2015), nor do they include expenses for services not covered by the plan, such as dental care or over-the-counter medications.

In 2015, out-of-pocket limits for MA-PDs will be higher, on average, than in 2014, increasing by 5 percent, on average, from $4,797 in 2014 to $5,037 in 2015, continuing the trend in rising out-of-pocket limits observed over the past few years (Exhibit 9). The share of MA-PDs that limit out-of-pocket expenses to $3,400 or less has decreased from 51 percent in 2011 to 9 percent in 2015. In contrast, almost half (48%) of plans will have limits above $5,000 in 2015, up from 24 percent in 2011.

Average out-of-pocket limits vary by plan type, but across all plan types, out-of-pocket limits have increased over the past few years (Exhibit 10). Out-of-pocket spending limits exceed $5,000 for virtually all regional PPOs (96%), 61 percent of local PPOs, and a smaller share of HMOs (44%). However, most HMOs (92%) will have limits above $3,400 in 2015, up from 60 percent in 2014. Similarly, 90 percent of local PPOs and 100 percent of regional PPOs will have limits above $3,400 in 2015 (up from 69% and 90%, respectively, in 2014).

If MA-PD enrollees stay in the same plan in 2014, out-of-pocket limits will increase an average of $170 (from $4,898 in 2014 to $5,068 in 2015). Enrollees in local PPOs will see the largest increase in out-of-pocket limits if they don’t switch plans ($323, on average), followed by regional PPO enrollees ($261, on average) with smaller average increases in out-of-pocket limits for HMO enrollees ($162, on average; Table A1). While the average out-of-pocket limit among Medicare Advantage plans has increased, it still is somewhat lower in 2015 than the limit that has been proposed for traditional Medicare under many Medicare reform proposals ($5,500).¹⁶  However, increases in out-of-pocket limits over time mean that beneficiaries enrolled in Medicare Advantage plans have less protection against high out-of-pocket costs than beneficiaries with Medigap plans.¹⁷ 

Prescription Drug Coverage

Traditional Medicare did not offer an outpatient prescription drug benefit prior to 2006, and Medicare Advantage plans were an important source of prescription drug coverage for Medicare beneficiaries. While many plans offered some coverage for prescription drugs prior to 2006, beginning in 2006, all beneficiaries had access to a prescription drug plan, either through free-standing prescription drug plans (PDPs) or a Medicare Advantage plan that included drug coverage (MA-PD).

The initial design of the Medicare drug benefit included a coverage gap, or “doughnut hole,” which required beneficiaries with relatively high drug costs to pay 100 percent of their expenses in the coverage gap until they qualified for catastrophic protection. The ACA gradually closes the doughnut hole and eliminates the gap by 2020. In 2015, beneficiaries will be responsible for no more than 45 percent of the cost of brand-name drugs and 75 percent of the cost of generic drugs in the gap.

In 2015, eighty-six percent of Medicare Advantage plans will offer prescription drug coverage, up from 83 percent in 2014 and 75 percent in 2007 (Exhibit 11). Historically, Medicare Advantage plans without a drug benefit were developed to meet the needs of beneficiaries who may have access to other sources of prescription drug coverage, as well as those who for any other reason do not want to purchase such coverage.

The standard design of the drug benefit also includes an initial coverage deductible of $320 in 2015. Plans can vary the benefit design as long as they provide cost-sharing that is at least actuarially equivalent to the standard benefit, and MA-PDs have historically had lower cost-sharing that may have helped to attract enrollees. In 2015, fewer plans in Medicare Advantage are designed to eliminate the deductible entirely (63% in 2015 versus 82% in 2014; Exhibit 12). This mirrors the trend in PDPs, although no deductible plans are still more common in Medicare Advantage plans than PDPs; 47 percent of PDPs have no deductible.¹⁸  In 2015, the average deductible for MA-PDs will be $89.72, up from $38.24 in 2014. Almost one-quarter (24%) of MA-PDs will have deductibles greater than $200 in 2015, an increase from 9 percent of MA-PDs in 2014. This increase in prescription drug deductibles could indicate that MA-PDs may be increasing cost-sharing for prescription drugs, since the deductible is the most visible part of cost-sharing; however, cost-sharing for plans needs to be analyzed in its totality, including cost-sharing for drugs as well as medical services, in order to draw conclusions.

Less than half (44%) of MA-PDs will provide additional coverage in the Part D coverage gap in 2015, beyond that which is required by the ACA, down from 50 percent in 2014 (Exhibit 11). As in prior years, coverage in the Part D doughnut hole will vary by plan type, with a larger than average share of PFFS plans (62%), and a smaller than average share of HMOs (46%), local PPOs (39%), and regional PPOs (12%), providing additional coverage in the gap, beyond that which is required by the ACA (data not shown).

Quality Ratings

For many years, the CMS has posted quality ratings of Medicare Advantage plans to provide Medicare beneficiaries with additional information about plans offered in their area. All Medicare Advantage plans are rated on a 1 to 5 star scale, with 1 star representing poor performance, 3 stars representing average performance, and 5 stars representing excellent performance. The quality scores for Medicare Advantage plans are derived from plan and beneficiary information collected in three surveys – HEDIS^®, CAHPS^®, and HOS – and administrative data. For example, the performance measures include whether the plans’ enrollees received the appropriate screening tests, the number of complaints CMS received about the plan, and how enrollees rated the communication skills of the plans’ physicians. CMS assigns quality ratings at the contract level, rather than for each individual plan. This means that every Medicare Advantage plan covered under the same contract receives the same quality rating (and most contracts cover multiple plans).

In 2012, Medicare Advantage plans began receiving bonus payments based on quality ratings. These payments were initially established in the ACA and provided for bonus payments to plans that receive 4 or more stars and to unrated plans beginning in 2012. In addition to the bonus payments established by the ACA, CMS launched a demonstration for 2012 through 2014 that increased the size of bonuses for these plans, and also provided bonuses to plans rated as average (receiving 3 or 3.5 stars), using the same 1 to 5 star scale. In 2015, the bonus payments will revert back to those that were authorized under the ACA, and plans with 3 or 3.5 stars will not receive bonus payments. Beneficiaries can enroll in a plan with 5 stars at any time during the year, not just during the annual open enrollment period.

In 2015, one-third (33%) of Medicare Advantage contracts will have ratings of four or more stars, though just 2 percent of contracts attained the highest star rating – five stars (Exhibit 13). All of these Medicare Advantage contracts will qualify for bonus payments in 2015. Almost four in ten contracts (39%) will have average ratings (3 or 3.5 stars), and 4 percent of contracts will have below average ratings (2 or 2.5 stars) in 2015; almost one-quarter (24%) of contracts will be too new or have too few enrollees to be rated.

From the beneficiary perspective, the vast majority of Medicare beneficiaries (97%) will have access to at least one plan with four or more stars in 2015, an increase from about half (51%) in 2012 . This significant increase in access to plans with four or more stars is primarily due to Humana offering a regional PPO with four stars in most parts of the country.

The share of Medicare Advantage contracts with four or more stars has steadily grown since 2012, when the CMS bonus payment demonstration began, and has increased from one-fifth (20%) of plans in 2012. The increase in star quality ratings for plans during the CMS bonus demonstration could be attributed to many factors. Plans clearly responded to the financial incentives pertaining to quality-based ratings and bonuses in the ACA and demonstration, and over time, appear to have learned to modify their practices to maximize quality bonus payments. In addition, CMS has modified the methodology used for determining quality-based ratings; for example, they eliminated the normal distribution of ratings across plans, which had the effect of limiting the number of highly rated plans. It remains to be seen whether quality ratings will continue to improve.

Discussion

Medicare beneficiaries will continue to be able to choose from numerous Medicare Advantage plans and 95 percent of beneficiaries enrolled in Medicare Advantage in 2014 will be able to stay with the same plan unless they choose to switch to another. Markets are by nature unstable as they transition in response to competition. Over the past several years, the Medicare Advantage marketplace has been relatively stable, with relatively few plan exits that could cause disruption in coverage. Firms continue to offer diverse products and most beneficiaries have a choice of HMOs and PPOs, while fewer beneficiaries have access to PFFS plans. Medicare Advantage plans’ low premiums (relative to Medigap) and their ability to package traditional Part A and B benefits, prescription drugs, and some aspects of supplemental coverage into a single offering have proven popular both with insurers and a sizeable subgroup of Medicare beneficiaries.

Consistent with trends elsewhere in the health insurance market, premiums for Medicare Advantage plans are increasing. This change is greater when viewed in percentage terms than absolute dollar terms and is best viewed in conjunction with an analysis of benefits and out of pocket costs for services. While this brief does not examine details on the benefit and cost sharing requirements of Medicare Advantage plans, it documents the increase in out-of-pocket limits across plans, which exposes Medicare beneficiaries with relatively high costs to greater financial risk. Further work is needed to determine the changes in Medicare Advantage plan benefits in response to the ACA and their impact on enrollees’ actual out-of-pocket costs. The reality is that both traditional Medicare and Medicare Advantage plans face challenges in providing financial protection to beneficiaries.

1. See Kaiser Family Foundation, “Explaining Health Reform: Key Changes in the Medicare Advantage Program, April 29, 2010. http://modern.kff.org/health-reform/issue-brief/explaining-health-reform-key-changes-in-the/; and Kaiser Family Foundation “Medicare Advantage Fact Sheet” May 2014. https://modern.kff.org/medicare/fact-sheet/medicare-advantage-fact-sheet/ ↩︎
2. For more details, see Jacobson G, Damico A, and Neuman, T, “What’s In and What’s Out? Medicare Advantage Market Entries and Exits for 2015” October 2014. https://modern.kff.org/medicare/issue-brief/whats-in-and-whats-out-medicare-advantage-market-entries-and-exits-for-2015/ ↩︎
3. Plan specific information about cost-sharing requirements and benefits is at www.medicare.gov on the “Find Health and Drug Plan” database. However, this database does not include summary statistics on the characteristics of plans available nationwide or in particular areas. Further research is needed to assess changes in benefits and cost sharing among Medicare Advantage plans over time. ↩︎
4. Data for individual plans offered are contained in the MA and SNP Landscape Source files for 2015 and previous years. http://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/index.html ↩︎
5. A non-consolidating plan is one that is no longer available anywhere in the country and whose beneficiaries must find another Medicare Advantage plan, or switch to traditional Medicare. A consolidating plan is one that has merged with one or more other consolidating plans to form a plan newly-available in 2015, and whose 2014 MA enrollees will be automatically rolled over into that new post-consolidation plan. If two plans consolidate into one, then this analysis counts that as one departing plan. ↩︎
6. For more details, see Jacobson G, Damico A, and Neuman, T, “What’s In and What’s Out? Medicare Advantage Market Entries and Exits for 2015” October 2014. https://modern.kff.org/medicare/issue-brief/whats-in-and-whats-out-medicare-advantage-market-entries-and-exits-for-2015/ ↩︎
7. For more on the factors affecting seniors’ plan enrollment decisions, see Jacobson G, Swoope C, Perry M, Slosar M, “How are Seniors Choosing and Changing Health Insurance Plans?” May 2014. https://modern.kff.org/medicare/report/how-are-seniors-choosing-and-changing-health-insurance-plans/ ↩︎
8. For example, see Gold M, Jacobson G, Damico A, and Neuman T, “Medicare Advantage 2014 Spotlight: Enrollment Market Update.” May 2014. https://modern.kff.org/medicare/issue-brief/medicare-advantage-2014-spotlight-enrollment-market-update/ ↩︎
9. See M. Gold “Making Sense of the Change in How Medicare Advantage Plans are Paid” Issue Brief. New York: The Commonwealth Fund, May 2013. http://www.mathematica-mpr.com/our-publications-and-findings/publications/making-sense-of-the-change-in-how-medicare-advantage-plans-are-paid, and M. Gold and M. Hudson “Analysis of the Variation in Efficiency of Medicare Advantage Plans Relative to Medicare FFS.” Paper developed for the Commonwealth Fund, Washington DC: Mathematica Policy Research Research Brief, May 2013. http://www.mathematica-mpr.com/our-publications-and-findings/publications/analysis-of-the-variation-in-efficiency-of-medicare-advantage-plans ↩︎
10. See Gold M, Jacobson G, Damico A, and Neuman T, “Medicare Advantage 2011 Data Spotlight: Medicare Advantage Enrollment Market Update.” September 2011. https://modern.kff.org/health-reform/issue-brief/medicare-advantage-2011-data-spotlight-medicare-advantage/ ↩︎
11. See Gold M, Jacobson G, Damico A, and Neuman T, “Medicare Advantage 2014 Spotlight: Enrollment Market Update.” May 2014. https://modern.kff.org/medicare/issue-brief/medicare-advantage-2014-spotlight-enrollment-market-update/ ↩︎
12. Blue Cross and Blue Shield Association. 2014 Medicare Advantage and Prescription Drug Plans Offered by Blue Cross and Blue Shield Affiliated Companies, Updated January 2014. http://www.bcbs.com/already-a-member/the-blues-and-medicare/2013-Medicare-Advantage-and-Prescription-Drug-Plans.pdf ↩︎
13. See Aetna, “2013 Investor Conference,” December 12, 2013. http://www.aetna.com/investors-aetna/assets/documents/2013%20Investor%20Conference/2013-Investor-Conference-Presentation.pdf ↩︎
14. See UnitedHealth Group press release, “UnitedHealthcare Introduces 2015 Medicare Plans.” October 1, 2014. http://www.unitedhealthgroup.com/Newsroom/Articles/Feed/UnitedHealthcare/2014/1001MedicarePlans2015.aspx ↩︎
15. For more details, see Gold M, Hudson M, Jacobson G, Damico A, and Neuman T, “Medicare Advantage 2010 Data Spotlight: Benefits and Cost-sharing,” February 2010. https://modern.kff.org/medicare/issue-brief/medicare-advantage-2010-data-spotlight-benefits-and/ ↩︎
16. For examples, see Kaiser Family Foundation, “Medicare and the Federal Budget: Comparison of Medicare Provisions in Recent Federal Debt and Deficit Reduction Proposals,” January 2014. https://modern.kff.org/medicare/issue-brief/medicare-and-the-federal-budget-comparison-of-medicare-provisions-in-recent-federal-debt-and-deficit-reduction-proposals/ ↩︎
17. For standard Medigap plans, see http://www.medicare.gov/supplement-other-insurance/compare-medigap/compare-medigap.html Most enrollees are in Standard plans F and C which cover most out of pocket costs for Part A and Part B. Medicare benefits. See, J. T. Huang, G.A. Jacobson, T. Neuman, K.A. Desmond, and T. Price “Medigap: Spotlight on Enrollment, Premiums, and Recent Trends, April 2013. https://modern.kff.org/medicare/report/medigap-enrollment-premiums-and-recent-trends/ ↩︎
18. J. Hoadley, L. Summer, E. Hargrave, J. Cubanski, and T. Neuman. “Medicare Part D in its Ninth Year: The 2014 Marketplace and Key Trends, 2006-2014, Kaiser Family Foundation, August 2014. https://modern.kff.org/medicare/report/medicare-part-d-in-its-ninth-year-the-2014-marketplace-and-key-trends-2006-2014/   ↩︎

Since the establishment of global malaria incidence and mortality reduction targets in the Millennium Development Goals (MDGs) in 2000, significant progress has been made in addressing the global malaria epidemic. Between 2000 and 2012, global malaria incidence rates are estimated to have decreased by 25% and mortality rates by 42%, and more than 30 countries are actively pursuing malaria elimination. Despite this progress, however, there were approximately 207 million malaria cases and 627,000 deaths in 2012, and close to 100 countries have ongoing malaria transmission. In addition, approximately half the world’s population remains at risk for malaria.¹  As such, it is unclear whether global malaria control targets set out by the World Health Organization (WHO) and the Roll Back Malaria (RBM) Partnership, including reducing malaria cases by 75% and malaria deaths to near zero by the end of 2015, will be reached.^2 ,3 ,4 

Critical to reaching global malaria targets is adequate funding. The Global Malaria Action Plan (GMAP), released by Roll Back Malaria in 2008 as a framework to guide malaria control efforts through 2015, estimated that funding would need to reach an average of US$5.1 billion annually between 2011 and 2020 in order to reach malaria control and elimination targets. Additionally, GMAP estimates that funding for malaria research and development (R&D) would need to reach at US$750-900 million annually between 2008-2018.⁵ 

This report provides an analysis of malaria funding trends for control and elimination and R&D activities over time compared to the estimated need presented in the GMAP. It also looks ahead to assess projected funding availability. The report is based on analysis of data obtained from the United States (U.S.) government; the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund); the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC); WHO; Policy Cures; and the Bill & Melinda Gates Foundation (Gates Foundation) (see Methodology for more information). The analysis is timely as the global community is in the process of evaluating progress on the MDGs, and looks beyond 2015 to set new and updated malaria targets.^6 ,7  As it finds, while funding for malaria has risen significantly over time, it is far below estimated need and the gap is significant.

Key Findings Include:

Global Funding for Malaria Control and Elimination:

• In 2013, funding for malaria control reached US$2.6 billion, its highest level to date.
• Approximately two-thirds of all funding for malaria control is concentrated among just two donors: the Global Fund, which is the single largest source of malaria funding, accounting for 40% (US$1.0 billion) of funding in 2013, and U.S. bilateral funding (US$675 million, 26%). The next largest source, domestic resources provided by malaria-affected countries, accounts for one-fifth of funding (US$527 million, 20%), followed by the United Kingdom (U.K.) (US$179 million, 7%), and the World Bank (US$71 million, 3%).
• Funding for malaria control has increased significantly over the past decade, rising three fold between 2005 and 2013, (from US$871 million in 2005 to US$2.6 billion in 2013), largely due to the creation of the Global Fund. Recent increases, however, have slowed.

Global Funding for Malaria R&D:

• In 2013, funding for malaria R&D activities totaled US$549 million. This represents a decrease of US$38 million (7%) from 2012 levels and the second consecutive year of declines in R&D funding for malaria.
• The U.S. National Institutes of Health (NIH) accounted for the largest share (25%) of funding for malaria R&D activities followed by the Gates Foundation (22%), the pharmaceutical and biotechnology industry (15%), the U.K. Department for International Development (DFID) (5%), and the Wellcome Trust (5%). 

Global Funding Gap & Looking Ahead:

• Despite significant increases over the past decade, total funding for malaria control activities is significantly below the GMAP’s estimated annual need of US$5.1 billion. Similarly, support for malaria R&D programs was also below the estimated annual need (US$750-900 million).
• While funding levels for malaria control activities beyond 2013 are not yet known for all funding sources, projected data are available from the U.S. and the Global Fund, the two largest funders for malaria efforts, and both are projected to increase their funding in the next several years. However, even with these increases, projected funding would only reach US$3.0 billion in each year between 2014 and 2016, still leaving a gap of more than US$2 billion. In addition, the concentration of malaria funding from these two donors makes funding highly dependent on their future funding trajectories.
• While projections of future funding levels are not available for malaria R&D activities, if the funding declines of the past two years continue, the gap between estimated need and available resources will increase.
• Taken together, these estimates indicate that unless significant additional resources are provided, this gap cannot be filled. As the global community meets to decide on updated malaria control targets and funding needs, it will be critical to assess where resources are likely to come from, particularly given the large gap identified here.

Since the establishment of global malaria incidence and mortality reduction targets (see Box 1), significant progress has been made in addressing the global malaria epidemic. Between 2000 and 2012, the WHO estimates that global malaria incidence rates decreased by 25% and mortality rates decreased by 42%, saving an estimated 3.3 million lives, with more than 30 countries actively pursuing malaria elimination. Despite this progress, approximately 207 million malaria cases and 627,000 deaths occurred in 2012, and close to 100 countries report ongoing malaria transmission. Approximately half the world’s population remains at risk for malaria making it unclear whether global malaria targets set out by the WHO and RBM, including reducing malaria cases by 75% and malaria deaths to near zero by the end of 2015, will be reached. ^{8 ,9 ,10 ,11} 

Critical to reaching global malaria targets is adequate funding. The GMAP, released by RBM in 2008 to provide a global framework for guiding malaria control efforts through the end of 2015, estimated that funding would need to reach an average of US$5.1 billion annually between 2011 and 2020 in order to reach global targets.¹²  Funding for malaria control and elimination supports efforts to prevent infection, including the provision of insecticide-treated bed nets (ITNs), indoor residual spraying (IRS), and intermittent preventive treatment in pregnancy (IPTp), as well as the treatment of infection, including antimalarial drugs such as artemisinin-based combination therapy (ACT).

Funding needs for malaria R&D, which supports the development of new diagnostics, vector control products, vaccines, and treatment, were estimated at US$750-900 million annually between 2008-2018.¹³  As the global community evaluates progress on the MDGs, and looks beyond 2015 with concurrent efforts to update the GMAP and develop a global technical strategy for malaria, this report provides an analysis of malaria funding trends over the past decade by funding source (see Box 2), and looks ahead, to assess projected funding availability relative to need.^14 ,15 

This report includes analysis of funding for malaria control and R&D activities based on data obtained from the U.S. government; the Global Fund; the OECD DAC; WHO; Policy Cures, an independent research organization that tracks funding for global health research and development activities; and the Gates Foundation (see Methodology for more information). All data are provided in current US dollars. Detailed data by source and year are provided in an Appendix.

Global Funding for Malaria Control & Elimination

Total funding for malaria control and elimination provided by donor governments, multilateral organizations, and domestic sources was estimated to be US$2.6 billion in 2013. Approximately two thirds of all funding for malaria control is concentrated among just two donors: the Global Fund, which is the single largest source of malaria funding, accounting for 40% (US$1.0 billion) of funding in 2013 and the U.S. (US$675 million, 26%), primarily through its bilateral President’s Malaria Initiative (PMI).¹⁶  The next largest source, domestic resources provided by malaria-affected countries, accounts for one-fifth of funding (US$527 million, 20%), followed by the U.K. (US$179 million, 7%), and the World Bank (US$71 million, 3%) (see Figure 1). Together, these five sources accounted for 97% of all funding for malaria control activities (see Box 2 for a description of funding sources).

Funding in 2013 represents an increase of more than US$100 million, or 4%, over 2012 levels. In general, funding has grown significantly over the past decade, increasing from US$871 million in 2005 to US$2,581 million in 2013, a three-fold increase. In recent years, however, increases have been much smaller: between 2005 and 2009, funding increased by US$1.39 billion, compared to an increase of US$0.31 billion between 2009 and 2013 (see Figure 2).[endnote 137075-5]

Most of the growth since 2005 can be attributed to the Global Fund, first created in 2002 and which quickly has grown to become the single largest source of malaria funding in the world, and to funding from the U.S. government; the Global Fund accounted for 43% of the growth over the period and the U.S. accounted for 33%. Combined funding increases from all other sources accounted for 24% of the growth over the period. As a result, the combined share of total resources provided by the Global Fund and the U.S. has increased, rising from 48% in 2005 (35% from the Global Fund and 13% from U.S.) to 67% in 2013 (40% from the Global Fund and 26% from the U.S.) (see Figure 3).

While domestic funding demonstrated an overall increase between 2005 and 2013 (rising from US$436 million in 2005 to US$527 million in 2013), it has declined in recent years from its peak of US$598 million in 2011. Additionally, it has declined as a share of total resources from 50% in 2005 to 20% in 2013 as funding provided by the U.S. and the Global Fund has risen faster. Funding from the U.K. rose from US$35 million in 2007¹⁷  to an estimated US$179 million in 2013, while funding from the World Bank grew from US$15 million in 2005 to a peak level of US$95 million in 2009 and has since declined to an estimated US$71 million in 2013.

Global Funding for Malaria R&D

According to data from Policy Cures, total funding for malaria research and development activities in 2013 was estimated to be US$549 million, a decrease of US$38 million compared to 2012 levels (US$587 million) and was at its lowest level of funding since 2010 (see Figure 4).[endnote 137075-7]

The NIH accounted for the largest share (25%) of malaria research and development funding in 2013, followed by the Gates Foundation (22%) [the Gates Foundation also provides other funding for malaria (see Box 3)]. The third largest source of funding for malaria R&D is the pharmaceutical and biotechnology industry (15%), followed by DFID (5%), and the Wellcome Trust (5%), a charitable organization in the U.K. that supports biomedical research and the medical humanities (see Figure 5).

Global Funding Gap & Looking Ahead

Despite significant increases over the past decade, total funding for malaria control activities in 2013 was significantly below the GMAP’s estimated annual need of US$5.1 billion. Similarly, support for malaria R&D programs was also below the estimated annual need (US$750-900 million).¹⁸ 

While future funding levels for malaria control activities beyond 2013 are not yet known for all funding sources, projected data are available from the U.S. and the Global Fund, the two largest funders of malaria efforts. Both are projected to increase their funding in the next several years. The Global Fund has already allocated approximately US$4.3 billion for malaria in the period between 2014 and 2016 (US$1.4 billion annually), which would be a nearly US$400 million increase above 2013 levels.¹⁹  U.S. bilateral funding is projected to increase to US$693 million in 2014 (an $18 million increase), and US$701 in 2015 (an $8 million increase above 2014 levels).²⁰  Based on these increases, and assuming funding from all other sources remains flat, total funding for malaria control would rise to US$3.0 billion in each year between 2014 and 2016 (see Figure 6). This would still leave a gap of US$2.1 billion. In fact, even if all other donors doubled their funding for malaria, there would still be a gap.

While projected funding levels are not available for malaria R&D activities, if the funding declines of the past two years continue, the gap between estimated need and available resources will increase.

Separately, in its 2014 World Malaria Report, WHO has made future projections of malaria funding under two longer-term funding scenarios for 2020.²¹  The first scenario projects what would happen if malaria funding increased at the same rate as overall government expenditures are projected to increase. The second scenario adds to the first by projecting additional gains that would occur if donor governments met the official development assistance (ODA) target of 0.7% of Gross National Income, a global target first pledged by the United Nations General Assembly in 1970 and reaffirmed at subsequent international meetings.²²  Despite these scenarios leading to increased funding for malaria, neither reaches the $5.1 billion estimated need. Scenario 1 results in a total funding estimate of US$3.8 billion in 2020 and Scenario 2 results in US$4.3 billion.

Despite significant increases over the past decade, total funding for malaria control activities is significantly below the GMAP’s estimated annual need of US$5.1 billion. Similarly, support for malaria R&D programs was also below the estimated annual need (US$750-900 million).²³  Projected funding levels, while increasing under different scenarios, also fall short of estimated need. Taken together, these findings raise significant questions and uncertainties about global malaria control and elimination efforts. As the global community meets to decide on updated malaria control targets and funding needs, it will be critical to assess where resources are likely to come from. First, unless significant additional resources are provided, this gap cannot be filled. Further, it is unclear where such resources could come from – beyond the U.S. and the Global Fund, other funding sources combined only account for about a third of total funding; they would have to more than double their share to fill the gap. Lastly, the concentration of funding from the U.S. and the Global Fund makes future funding highly dependent on, and therefore vulnerable to, their future funding trajectories. Unless significant additional resources are provided, this gap cannot be filled and it is unclear what this will mean for reaching global malaria targets and truly having a long lasting and deep impact on this disease.

 

This report analyzes funding data for malaria control and elimination activities as well as R&D. All data are expressed in current (nominal) US dollars.

Malaria Control and Elimination. Funding data for malaria control and elimination activities were obtained from multiple sources including: the U.S. government; the Global Fund’s grant portfolio database; the WHO’s World Malaria Report 2014; and the OECD DAC Creditor Reporting System (CRS) database.

All funding data for malaria control and elimination activities represent disbursements, with the exception of U.S., which represents enacted funding amounts. A disbursement is the actual release of funds to, or the purchase of goods or services for, a recipient. Enacted amounts represent budgetary decisions that funding will be provided, regardless of the time at which actual outlays, or disbursements, occur. Data attributed to a donor include any earmarked (malaria-designated) amount, including earmarked contributions to multilateral initiatives such as the AMfm. Data do not include un-earmarked, general contributions to multilateral organizations, such as the United Nations or World Bank, which may in turn be used for malaria activities and are therefore attributed to the multilateral organization itself.

U.S. data include funding from the U.S. Agency for International Development (USAID), the Centers for Disease Control and Prevention (CDC), and the Department of Defense (DoD) and were obtained from the President’s FY 2015 budget request, Congressional appropriations bills and conference reports, federal agency budget and Congressional Justification (CJ) documents and operational plans, ForeignAssistance.gov (http://www.foreignassistance.gov/web/default.aspx), and through direct communication with the agencies and confirmed by the White House Office of Management and Budget (OMB). All U.S. totals represent funding for the specified fiscal year (the U.S. fiscal year runs from October 1-September 30). U.S. data for 2005 through 2014 are final funding levels. U.S. funding for 2015 was not yet finalized at the time of publication; U.S. data for 2015 are based on the President’s Budget Request.

Global Fund data for 2005 through 2013 were obtained from the Global Fund’s disbursement database (http://web-api.theglobalfund.org/) and represent funding provided during the calendar year (January 1-December 31). Projected funding levels for 2014 through 2016 are based on Global Fund reported planned allocations levels (http://www.theglobalfund.org/en/fundingmodel/allocationprocess/). It is important to note that actual allocations may differ due to final recipient country allocations across the three diseases.

Data for domestic resources were obtained from the WHO World Malaria Report 2014 (WMR). Domestic resources are based on financing data from national malaria control programmes (NMCPs).

Data were obtained from the OECD CRS database (http://stats.oecd.org/Index.aspx?datasetcode=CRS1) for the following donors: Australia, Austria, Belgium, Canada, Finland, France, Germany, Greece, Ireland, Italy, Japan, Korea, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Switzerland, the United Kingdom, the European Commission (EC), the United Nations Children’s Fund (UNICEF), the World Bank, Kuwait, and the United Arab Emirates (UAE). The CRS database is based on the calendar year (January 1-December 31) and includes data through the 2012, the most recent year of available data. With the exception of the U.K., data for 2013-2016 for these donors assumes flat funding (excluding the U.K., these donors together accounted for approximately 7% of total malaria funding in 2012). In the case of the U.K., 2013 totals represent projected increases based on prior trends and official government documents; 2014 and 2015 totals assume flat funding.^24 ,25 

Research and Development: Data for R&D were obtained via special data request from Policy Cures, an independent research organization that has been tracking funding for global health research and development activities since 2007. This source was used because it is more comprehensive than the OECD CRS database, which does not include all donor funding for research and development activities, nor does it include funding from the private sector. R&D funding amounts included in this report are presented in nominal dollars and therefore, will not match data presented in Policy Cures’ annual G-FINDER Report and online database, which are presented in real (inflation adjusted) dollars.²⁶ 

Gates Foundation: Data from the Gates Foundation were obtained through direct communication with the organization and include funding for both malaria control and research and development activities. Data for 2001 through 2008 are based on Gates Foundation internal reporting methodologies, while data for 2009 through 2013 are based on funding amounts reported by the Gates Foundation to the International Aid Transparency Initiative (IATI). Data do not include Gates Foundation’s contributions to the Global Fund which may in turn be used for malaria activities. In addition, data totals cannot be disaggregated into separate malaria control and elimination and R&D amounts, and due to differences in reporting methodologies, are not directly comparable to the data provided by Policy Cures on R&D activities.

1. WHO. World Malaria Report 2013, December 2013. ↩︎
2. WHO, Fifty-Eighth World Health Assembly: Resolutions and Decisions Annex, May 2005. ↩︎
3. Roll Back Malaria, The Global Malaria Action Plan: For a malaria-free world, September 2008. ↩︎
4. Roll Back Malaria, Refined/Updated GMAP Objectives, Targets, Milestones and Priorities Beyond 2011, June 2011. ↩︎
5. Roll Back Malaria, The Global Malaria Action Plan: For a malaria-free world, September 2008. ↩︎
6. Roll Back Malaria, The Second Global Malaria Action Plan (GMAP2), (see: http://www.gmap2.org/english/home). ↩︎
7. WHO, Global technical strategy for malaria (2016-2030), (see: http://www.who.int/malaria/areas/global_technical_strategy/en/). ↩︎
8. WHO. World Malaria Report 2013, December 2013. ↩︎
9. WHO, Fifty-Eighth World Health Assembly: Resolutions and Decisions Annex, May 2005. ↩︎
10. Roll Back Malaria, The Global Malaria Action Plan: For a malaria-free world, September 2008. ↩︎
11. Roll Back Malaria, Refined/Updated GMAP Objectives, Targets, Milestones and Priorities Beyond 2011, June 2011. ↩︎
12. Roll Back Malaria, The Global Malaria Action Plan: For a malaria-free world, September 2008. ↩︎
13. Roll Back Malaria, The Global Malaria Action Plan: For a malaria-free world, September 2008. ↩︎
14. Roll Back Malaria, The Second Global Malaria Action Plan (GMAP2), (see: http://www.gmap2.org/english/home). ↩︎
15. WHO, Global technical strategy for malaria (2016-2030), (see: http://www.who.int/malaria/areas/global_technical_strategy/en/). ↩︎
16. The U.S. is also the single largest donor to the Global Fund, but contributions to the Global Fund are in turn used by the Global Fund to support HIV, TB, and malaria efforts. U.S. funding totals for malaria, therefore, do not include contributions to the Global Fund. See Methodology for additional information. ↩︎
17. The U.K. reported malaria funding to the OECD DAC for the first time in 2007. ↩︎
18. Roll Back Malaria, The Global Malaria Action Plan: For a malaria-free world, September 2008. ↩︎
19. These figures are based on Global Fund planned allocations but actual disbursement rates may vary and are also dependent on recipient country allocation decisions. For example, as of December 4, the Global Fund had disbursed US$714 million for malaria efforts for the year, below the planning annual average of $1.4 billion. ↩︎
20. For the U.S., 2014 amounts are final funding levels, 2015 is based on the President’s Budget Request, and 2016 assumes the same level of funding as 2015. ↩︎
21. WHO, World Malaria Report 2014, December 2014. ↩︎
22. United Nations, Resolution adopted by the General Assembly: 2626 (XXV). International Development Strategy for the Second United Nations Development Decade, October 1970. ↩︎
23. Roll Back Malaria, The Global Malaria Action Plan: For a malaria-free world, September 2008. ↩︎
24. WHO, World Malaria Report 2014, December 2014. ↩︎
25. U.K. National Audit Office, Department of International Development, July 2013. ↩︎
26. Policy Cures, Neglected disease research and development: Emerging trends, December 2014. ↩︎