What’s the latest in health policy research? The Essential Scan aims to help keep you informed on the latest research and what it means for policymakers. It is produced by the USC-Brookings Schaeffer Initiative for Health Policy, a collaboration between the Brookings Institution and the USC Schaeffer Center for Health Policy & Economics. To sign up to receive the Essential Scan straight to your inbox, sign up here.
Biosimilar drugs duplicate the clinical effectiveness of biologics and have the potential to lower prices within the market, thereby producing savings for patients and payers. A new study leveraged prescription trends for filgrastim in its biologic form (Neupogen) and its biosimilar (Zarxio) to analyze provider biosimilar adoption and practice-level characteristics. Filgrastim is used to treat patients who lack certain white blood cells due to chemotherapy and other conditions. The authors analyzed trends among providers who administered only the biologic, only the biosimilar, or both. The data showed that the use of the biosimilar (Zarxio) has grown steadily since its 2015 launch. After three years, its share of medical claims had increased to 60 percent among physicians in office-based practice and 49 percent at hospital outpatient departments. Few providers prescribed both the biologic and the biosimilar to their patient group. The research also showed that office-based providers began adopting the biosimilar before its average price fell significantly in 2018. Meanwhile, use in outpatient hospitals conformed more closely to drops in price. The researchers argue that these findings have important implications for provider awareness and financial incentives that policymakers could consider to strengthen the biosimilar market. Full study here.
Study by: Hefei Wen, Aparna Soni, Alex Hollingsworth, et al
Opioid-related hospital events, including overdoses or visits with opioid use disorder, are considered a reflection of inadequate access to timely and effective treatment, such as medication-assisted treatment. One major barrier to such treatment is a lack of health insurance coverage. A new study assesses the association between the Affordable Care Act’s Medicaid expansion and rates of opioid-related emergency department (ED) visits and inpatient hospitalizations. Researchers identified a 9.7 percent decline in opioid-related inpatient hospitalizations associated with state implementation of the ACA Medicaid expansion. They also found suggestive evidence of larger inpatient reductions in states with greater treatment capacity and among demographic groups most likely to benefit from Medicaid expansion, including middle-aged adults and those residing in low-income zip code areas. They found no significant association between Medicaid expansion and the overall rate of opioid-related ED visits, but that the payers of both inpatient admissions and ED visits shifted from self-pay or charity care to Medicaid. This study provides evidence suggesting that Medicaid expansion may be financially beneficial to safety-net hospitals that were previously absorbing opioid-related admissions as uncompensated care, and underscores the importance of Medicaid expansion in altering the way patients with opioid-use disorder interact with the medical system. Full study here.
Study by: Adam Sacarny, Katherine Baicker, and Amy Finkelstein
Since the passage of the Affordable Care Act, health insurance eligibility has increased dramatically but health insurance enrollment remains more elusive. It is estimated that 14.3 percent of eligible adults and 7.2 percent of eligible children remain uninsured despite qualifying for Medicaid coverage. A new study examines the impact of expanded adult Medicaid eligibility on the Medicaid enrollment of already-eligible children. The study leverages the 2008 Oregon Medicaid lottery, in which some low-income uninsured adults were randomly selected for a chance to apply for Medicaid. The “woodwork” effect, whereby individuals who were previously eligible but unenrolled choose to enroll with a new expansion, has been identified in previous studies and has been cited by states as an explanation for their reluctance to expand Medicaid. Researchers found clear evidence of the woodwork effect occurring: for every 9 adults who gained coverage so did one already-eligible child. However, this number only represents 5 percent of researchers’ estimates of children of lottery list adults who could have enrolled, and both the direct effect on adult enrollment and spillover effect on children’s enrollment fade over the subsequent year. Researchers suggest that given these findings, woodwork effects may be quantitatively less important than previously thought. They highlight the continuing challenges that policymakers face in translating increases in Medicaid eligibility to increases in Medicaid enrollment. Full study here.
Rebates in the Pharmaceutical Industry: Evidence from Medicines Sold in Retail Pharmacies in the U.S.
Study by: Pragya Kakani, Michael Chernew, and Amitabh Chandra
Prescription drug list prices are set by manufacturers and can affect patient cost-sharing. Pharmacy Benefit Managers and insurers negotiate rebates with manufacturers, resulting in a net price that is typically kept confidential. A new working paper examines growth in rebates and the relationship between net-price growth and revenue growth between 2012 and 2017 using data from SSR Health, LLC, a private data aggregator. The authors found that from 2012 to 2017, average rebates increased from 32 percent to 48 percent across branded drugs in the sample. Rebates increased for 18 of the 20 largest drug classes, classified by 2017 revenue. The authors concluded that this increase in average rebates is due to growth in rebate levels over a product’s lifetime, rather than from new entrants of high-rebate products. Their analysis showed there was a significant difference between annual inflation of list prices (12%) and net prices (3%). Researchers argue the growth in list price and the financial gains of manufactures per unit sold have grown at disproportionate rates, a phenomenon seen in 95 percent of the top 20 drug classes by revenue. The researchers estimate the contribution of rising prices to growth in pharmaceutical revenue when assessed by net price instead of list price. They find just 31 percent of annual net revenue growth is explained by within-product price growth. The remainder is explained primarily by new product entry. The authors concluded that researchers should be careful in using list prices for policy analysis as they do not fully represent what is happening with prescription drug spending. Full study here.
The Essential Scan is produced by the USC-Brookings Schaeffer Initiative for Health Policy, a collaboration between the Brookings Institution and the USC Schaeffer Center for Health Policy & Economics.