Employer-Sponsored Insurance Plans Paid More Than Medicare for Common Drugs in 2020

Employer-sponsored insurance (ESI) plans paid more than Medicare plans for most top spend and top use drugs administered by physicians in 2020, according to findings published in JAMA Health Forum.

“Unlike Medicare, where physician-administered drug prices are based on average sales price (ASP), ESI prices are negotiated between health care professionals or health systems and insurers,” said Jessica Y Chang, MA, and Aditi P Sen, PhD, both affiliated with the Health Care Cost Institute. “Previous work has shown that ESI prices for cancer drugs are higher than prices for the same drugs in Medicare but has not examined prices of other physician-administered drugs or relative growth in prices over time.”

Using Medicare ASP files and deidentified claims data from 3 insurers between 2016 and 2020, researchers evaluated the unit price percentage difference, or markup, between ESI and Medicare rates.

Of the top spend drugs in 2020, pegfilgrastim’s markup was highest at 54% for ESI plans compared to Medicare, followed by trastuzumab (33%), nivolumab (24%), pertuzumab (22%), and rituximab (20%). However, the researchers found similar prices between ESI and Medicare plans for bevacizumab, natalizumab, and vedolizumab.

“Price markups increased between 2016 and 2020 for 5 of the top 10 spend drugs and more than doubled for 3 (pegfilgrastim, trastuzumab, and rituximab),” Ms Chang and Dr Sen found.

Compared to top spend drugs, top use agents were associated with significantly lower unit prices but higher ESI markups, findings showed. The costs of midazolam and ondansetron were 30 and 20 times higher, respectively, for ESI plans than Medicare in 2020. ESI markups were more than 200% for fentanyl citrate, propofol, saline solution, ketorolac tromethamine, and dexamethasone.

There was no association between price markups and the availability of biosimilars, according to the findings.

Ms Chang and Dr Sen noted their findings do not account for variations in price across care settings, and their use of claims data means the unit prices they studied may not equal actual negotiated prices.

“High ESI prices for physician-administered drugs raise overall spending and threaten access to innovative and lifesaving products for close to half of the US population with health insurance through their employer. Policies to reduce ESI prices for physician-administered drugs will be important; these efforts are needed for both low-price, commonly used drugs and the most expensive drugs,” researchers said.

Reference:
Chang JY, Sen AP. Comparison of prices for commonly administered drugs in employer-sponsored insurance relative to Medicare. JAMA Health Forum. 2023;4(2):e225422. doi:10.1001/jamahealthforum.2022.5422