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

Table A1: Drug Spending and Utilization by Drug Class, 2010-2012
    Rx in Thousands Medicaid Amount Reimbursed in Millions(not including rebates)
Drug Class Typical Usage 2010 2011 2012 2010 2011 2012
Central Nervous System Agents Broad category including pain relievers, antipsychotics, antidepressants 163,198 187,523 184,543 $11,022 $13,048 $12,030
Anti-infective Agents Dental, ear, respiratory, urinary tract  infections 48,778 58,195 54,253 $3,919 $4,854 $5,123
Cardiovascular Drugs High blood pressure, high cholesterol 44,886 51,027 51,989 $1,728 $1,864 $1,539
Hormones and Synthetic Substitutes Diabetes, birth control, steroidal responses to auto-immune diseases 43,271 50,165 50,728 $3,446 $4,218 $4,466
Autonomic Drugs Asthma and muscle spasms 27,791 33,873 33,674 $1,725 $2,154 $2,192
Gastrointestinal Drugs Gastroesophageal reflux disease (aka heartburn), gastric ulcers 26,490 30,787 31,281 $1,542 $1,597 $1,206
Skin and Mucous Membrane Preparations Skin rashes and bacterial skin infections 20,351 23,463 22,345 $888 $1,025 $990
Antihistamine Drugs Allergy treatment and nausea suppressants 18,070 20,844 19,549 $270 $262 $211
Eye, Ear, Nose & Throat Preparations Allergy treatment and ear infections 15,184 17,770 16,847 $783 $888 $728
Respiratory Tract Agents Asthma and cough suppressants 12,922 14,679 11,965 $1,012 $1,251 $1,094
Vitamins Dietary supplements and osteoporosis 12,752 14,120 14,082 $251 $242 $184
Electrolytic, Caloric, and Water Balance High blood pressure, treatment of peripheral edema 11,533 12,487 12,498 $226 $273 $278
Blood Formation, Coagulation & Thrombosis Treatment and prevention of blood clots, coronary artery disease 7,063 7,911 7,548 $2,000 $2,134 $1,976
Miscellaneous Therapeutic Agents Osteoporosis, gout, and coronary artery disease 4,085 4,342 4,162 $1,232 $1,504 $1,682
Antineoplastic Agents Chemotherapy 1,674 1,876 1,923 $1,074 $1,178 $1,255
Smooth Muscle Relaxants Urinary incontinence 1,465 1,522 1,431 $114 $118 $106
Pharmaceutical Aids Flavored syrup vehicle, used as to create oral liquid formulations of medications, e.g. for children or the elderly 328 192 191 $5 $4 $5
Devices Used to clean surfaces prior to use/procedures, e.g. to prepare the skin before checking blood glucose/sugar 180 158 212 $2 $2 $2
Local Anesthetics Local anesthesia 175 192 185 $6 $8 $9
Serums, Toxoids and Vaccines Autoimmune disease treatment 92 99 121 $114 $139 $142
Diagnostic Agents Cardiac stress test 75 121 128 $9 $13 $19
Oxytocics Postpartum hemorrhage, labor induction 75 70 62 $1 $1 $1
Heavy Metal Antagonists Iron overload 35 38 36 $97 $115 $118
Contraceptives Contraception devices 28 30 33 $11 $13 $16
Enzymes Hunter Syndrome, Gaucher disease 9 10 9 $89 $112 $107
Dental Agents Dental caries 9 12 10 $0 $0 $0
Blood Derivatives Intravascular volume expansion 3 3 3 $2 $2 $3
Disinfectants Disinfectants 2 1 1 $0 $0 $0
Gold Compounds Rheumatoid arthritis 0 0 0 $0 $0 $0
Cellular Therapy Prostate Cancer 0 0 0 $0 $0 $1
Unknown Class 1,055 353 202 $57 $12 $34
Source: CMS Drug Utilization Data, 2010-2012; Wolters Kluwer Master Drug Database, Version 2.5, 3/1/2013
Table A2: Central Nervous System Agent Spending and Utilization by Subclass, 2010-2012
  Rx in Thousands  
Medicaid Amount Reimbursed in Millions 
(not including rebates)
Drug Subclass 2010 2011 2012   2010 2011 2012
Analgesics and Antipyretics 58,730 68,285 65,341 $1,579 $1,781 $1,697
Anorexigenic Agents and Respiratory and CNS Stimulants 11,366 13,864 14,322 $1,550 $2,062 $2,176
Anticonvulsants 21,842 24,793 25,553 $1,190 $1,322 $1,317
Antimanic Agents 858 935 923 $17 $18 $16
Antimigraine Agents 988 1,183 1,182 $132 $133 $117
Antiparkinsonian Agents 2,234 2,493 2,513 $62 $55 $51
Anxiolytics, Sedatives, and Hypnotics 23,960 26,570 26,093 $374 $387 $345
Central Nervous System Agents, Misc 1,575 2,154 2,348 $264 $392 $474
Fibromyalgia Agents 79 113 90 $8 $13 $12
General Anesthetics 61 68 76 $5 $6 $7
Opiate Antagonists 67 80 84 $9 $13 $15
Psychotherapeutic Agents 41,438 46,984 46,018 $5,831 $6,865 $5,802
Source: CMS Drug Utilization Data, 2010-2012; Wolters Kluwer Master Drug Database, Version 2.5, 3/1/2013

Appendix B: Methodology

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

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

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

Limitations

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

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

Issue Brief

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