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A US government report showed how a Medicare policy change made the drug ustekinumab (Stelara) for autoimmune diseases much more expensive, a finding that experts say illustrates the need for reforms created by the Inflation Reduction Act of 2022 (IRA).
The topline findings of an August report from the Department of Health and Human Services (HHS) about ustekinumab may seem somewhat surprising and a bit counterintuitive.
Ustekinumab costs spiked as Medicare pushed patients to get their supply through the Part D pharmacy program. The aim of Part D is to make medicines more affordable and accessible for patients. It runs on a model of insurers to negotiate deals for pharmaceuticals.
Earlier, many patients who needed ustekinumab had the drug covered by Medicare Part B. For many years, Medicare Part B has been largely a passive purchaser of medicines. Part B covers drugs administered by physicians. Its longtime model has been to add a premium of 6% to the reported average sales price to reimburse physicians who buy and administer the drug for patients.
But it was Part D, the Medicare program based on insurers’ negotiating clout, that saw a spike in ustekinumab costs after patients were shifted out of Part B coverage, where the cost of the medicine fell.
The average reported Part B cost for an ustekinumab injection slipped from $14,450 in 2016 to $12,912 by 2023, according to the report from HHS’ Office of Inspector General (OIG).
The Part D cost jumped in the same period. It rose by 84% from $17,717 in 2016 to $32,559 by 2023.
The IRA is intended to curb these kinds of increases in the future for drugs covered by Medicare, said Stacie B. Dusetzina, PhD, professor of health policy at Vanderbilt University School of Medicine, Nashville, Tennessee. The law demands companies pay rebates to Medicare if they increase drug prices faster than consumer inflation.
“That should at least help with some of this price growth that over time has seemed quite egregious,” Dr. Dusetzina told this news organization.
The IRA contains several provisions intended to curb rising drug costs for people enrolled in Medicare, including allowing the federal government to directly negotiate on some medicines.
Ustekinumab is one of the first 10 medicines that are subject to negotiations. Medicare will select as many as 15 additional drugs covered under Part D for negotiation in 2025, another 15 Part B and D drugs in 2026, and up to 20 drugs every year after that.
Earlier in August, the Centers for Medicare & Medicaid Services (CMS) announced the results of its first drug negotiations, with prices set to take effect in 2026. The Part D price for a 30-day supply of ustekinumab will be $4695 in 2026, a 66% reduction from the list price last year of $13,836.
Even at the negotiated price, ustekinumab’s cost will be high enough to trigger a new cap on out-of-pocket Part D spending, Dr. Dusetzina said.
Starting in 2025, Part D will have a cap of $2000 on individuals’ out-of-pocket costs, with annual adjustments in future years.
“It may not be better for someone who was filling this on Part B, who had a supplement [that covered their share of the ustekinumab cost], but it will be better for a lot of people that it’s covered under Part D,” Dr. Dusetzina said. “The good news is that at least from a beneficiary affordability standpoint, they’re going to have some price protection.”
OIG noted that the US Food and Drug Administration has approved three competing biosimilar versions of ustekinumab. These could also potentially work to lower costs.
‘A Complicated and Not Particularly Transparent Process’
OIG said it expects to release a report later this year with more detail about the decision that shifted ustekinumab coverage from Part B to Part D.
First cleared for US sales in 2009, ustekinumab is approved for psoriasis, psoriatic arthritis, Crohn’s disease, and ulcerative colitis. It can be given subcutaneously or intravenously.
Part B does not generally cover self-administered drugs. The infused version of ustekinumab has been covered under Medicare Part B since it reached the market.
“However, Part B coverage of the subcutaneous versions has been less straightforward,” OIG said in the report.
In 2020, Medicare administrative contractors — the units or affiliates of insurers that for decades have processed Part B claims for the traditional Medicare programs — determined that subcutaneous ustekinumab did not meet the criteria for coverage under Part B. Implementation of this change was delayed due to the COVID public health emergency but has since taken effect.
The shift in ustekinumab coverage to Part D eroded financial protections of many people on Medicare when Part B covered the drug.
Almost 9 in 10 people enrolled in Medicare Part B have supplemental insurance such as Medigap, employer coverage, or Medicaid to fully or partially cover their cost-sharing requirements, the OIG report said. That means Part B coverage shielded many patients from high ustekinumab costs.
In contrast, patients who self-administered the drug at home under Part D coverage paid an average of almost $6000 out of pocket if they did not receive any type of financial assistance, OIG said.
“From a financial standpoint, as long as you have Part B coinsurance, it would be much cheaper to get the drug in your doctor’s office than getting it through a pharmacy, unless you qualify for the low-income subsidy,” OIG Regional Inspector General David Tawes, who supervised the team that produced the report, told this news organization.
OIG has previously reported that post–point-of-sale rebates paid by manufacturers sometimes lower the costs incurred by Part D plans by a significant margin. But this was not the case with ustekinumab. Instead, OIG said the gap between initial and actual costs of ustekinumab was reduced by less than one third even with rebates. Rebate information is considered confidential.
“The whole negotiation structure is a complicated and not particularly transparent process,” Mr. Tawes said.
Backchannel Discounts, Top-Line Prices
The IRA is bringing some more transparency to the process through negotiations, said Mariana P. Socal, MD, associate professor at the Johns Hopkins Bloomberg School of Public Health in Baltimore. Patients who buy medicines that have been through the CMS negotiation process will be able to see if they are being charged correctly.
Dr. Socal noted that there’s something of a disconnect in discussions of Part D between how insurers and consumers view prices.
For Part D plans, the list prices represent the beginning of negotiations. They get rebates from drugmakers’ list prices for medicines, which insurers say work to lower premium costs.
“For plans, those prices are unrealistic. They are simply a sticker price. But for patients, for the Medicare beneficiaries, these prices are very real” because they are used to set copays, Dr. Socal said.
Dr. Dusetzina reported receiving funding from Arnold Ventures and the Commonwealth Fund for research related to drug pricing. Dr. Socal reported receiving funding from Arnold Ventures.
A version of this article first appeared on Medscape.com.
A US government report showed how a Medicare policy change made the drug ustekinumab (Stelara) for autoimmune diseases much more expensive, a finding that experts say illustrates the need for reforms created by the Inflation Reduction Act of 2022 (IRA).
The topline findings of an August report from the Department of Health and Human Services (HHS) about ustekinumab may seem somewhat surprising and a bit counterintuitive.
Ustekinumab costs spiked as Medicare pushed patients to get their supply through the Part D pharmacy program. The aim of Part D is to make medicines more affordable and accessible for patients. It runs on a model of insurers to negotiate deals for pharmaceuticals.
Earlier, many patients who needed ustekinumab had the drug covered by Medicare Part B. For many years, Medicare Part B has been largely a passive purchaser of medicines. Part B covers drugs administered by physicians. Its longtime model has been to add a premium of 6% to the reported average sales price to reimburse physicians who buy and administer the drug for patients.
But it was Part D, the Medicare program based on insurers’ negotiating clout, that saw a spike in ustekinumab costs after patients were shifted out of Part B coverage, where the cost of the medicine fell.
The average reported Part B cost for an ustekinumab injection slipped from $14,450 in 2016 to $12,912 by 2023, according to the report from HHS’ Office of Inspector General (OIG).
The Part D cost jumped in the same period. It rose by 84% from $17,717 in 2016 to $32,559 by 2023.
The IRA is intended to curb these kinds of increases in the future for drugs covered by Medicare, said Stacie B. Dusetzina, PhD, professor of health policy at Vanderbilt University School of Medicine, Nashville, Tennessee. The law demands companies pay rebates to Medicare if they increase drug prices faster than consumer inflation.
“That should at least help with some of this price growth that over time has seemed quite egregious,” Dr. Dusetzina told this news organization.
The IRA contains several provisions intended to curb rising drug costs for people enrolled in Medicare, including allowing the federal government to directly negotiate on some medicines.
Ustekinumab is one of the first 10 medicines that are subject to negotiations. Medicare will select as many as 15 additional drugs covered under Part D for negotiation in 2025, another 15 Part B and D drugs in 2026, and up to 20 drugs every year after that.
Earlier in August, the Centers for Medicare & Medicaid Services (CMS) announced the results of its first drug negotiations, with prices set to take effect in 2026. The Part D price for a 30-day supply of ustekinumab will be $4695 in 2026, a 66% reduction from the list price last year of $13,836.
Even at the negotiated price, ustekinumab’s cost will be high enough to trigger a new cap on out-of-pocket Part D spending, Dr. Dusetzina said.
Starting in 2025, Part D will have a cap of $2000 on individuals’ out-of-pocket costs, with annual adjustments in future years.
“It may not be better for someone who was filling this on Part B, who had a supplement [that covered their share of the ustekinumab cost], but it will be better for a lot of people that it’s covered under Part D,” Dr. Dusetzina said. “The good news is that at least from a beneficiary affordability standpoint, they’re going to have some price protection.”
OIG noted that the US Food and Drug Administration has approved three competing biosimilar versions of ustekinumab. These could also potentially work to lower costs.
‘A Complicated and Not Particularly Transparent Process’
OIG said it expects to release a report later this year with more detail about the decision that shifted ustekinumab coverage from Part B to Part D.
First cleared for US sales in 2009, ustekinumab is approved for psoriasis, psoriatic arthritis, Crohn’s disease, and ulcerative colitis. It can be given subcutaneously or intravenously.
Part B does not generally cover self-administered drugs. The infused version of ustekinumab has been covered under Medicare Part B since it reached the market.
“However, Part B coverage of the subcutaneous versions has been less straightforward,” OIG said in the report.
In 2020, Medicare administrative contractors — the units or affiliates of insurers that for decades have processed Part B claims for the traditional Medicare programs — determined that subcutaneous ustekinumab did not meet the criteria for coverage under Part B. Implementation of this change was delayed due to the COVID public health emergency but has since taken effect.
The shift in ustekinumab coverage to Part D eroded financial protections of many people on Medicare when Part B covered the drug.
Almost 9 in 10 people enrolled in Medicare Part B have supplemental insurance such as Medigap, employer coverage, or Medicaid to fully or partially cover their cost-sharing requirements, the OIG report said. That means Part B coverage shielded many patients from high ustekinumab costs.
In contrast, patients who self-administered the drug at home under Part D coverage paid an average of almost $6000 out of pocket if they did not receive any type of financial assistance, OIG said.
“From a financial standpoint, as long as you have Part B coinsurance, it would be much cheaper to get the drug in your doctor’s office than getting it through a pharmacy, unless you qualify for the low-income subsidy,” OIG Regional Inspector General David Tawes, who supervised the team that produced the report, told this news organization.
OIG has previously reported that post–point-of-sale rebates paid by manufacturers sometimes lower the costs incurred by Part D plans by a significant margin. But this was not the case with ustekinumab. Instead, OIG said the gap between initial and actual costs of ustekinumab was reduced by less than one third even with rebates. Rebate information is considered confidential.
“The whole negotiation structure is a complicated and not particularly transparent process,” Mr. Tawes said.
Backchannel Discounts, Top-Line Prices
The IRA is bringing some more transparency to the process through negotiations, said Mariana P. Socal, MD, associate professor at the Johns Hopkins Bloomberg School of Public Health in Baltimore. Patients who buy medicines that have been through the CMS negotiation process will be able to see if they are being charged correctly.
Dr. Socal noted that there’s something of a disconnect in discussions of Part D between how insurers and consumers view prices.
For Part D plans, the list prices represent the beginning of negotiations. They get rebates from drugmakers’ list prices for medicines, which insurers say work to lower premium costs.
“For plans, those prices are unrealistic. They are simply a sticker price. But for patients, for the Medicare beneficiaries, these prices are very real” because they are used to set copays, Dr. Socal said.
Dr. Dusetzina reported receiving funding from Arnold Ventures and the Commonwealth Fund for research related to drug pricing. Dr. Socal reported receiving funding from Arnold Ventures.
A version of this article first appeared on Medscape.com.
A US government report showed how a Medicare policy change made the drug ustekinumab (Stelara) for autoimmune diseases much more expensive, a finding that experts say illustrates the need for reforms created by the Inflation Reduction Act of 2022 (IRA).
The topline findings of an August report from the Department of Health and Human Services (HHS) about ustekinumab may seem somewhat surprising and a bit counterintuitive.
Ustekinumab costs spiked as Medicare pushed patients to get their supply through the Part D pharmacy program. The aim of Part D is to make medicines more affordable and accessible for patients. It runs on a model of insurers to negotiate deals for pharmaceuticals.
Earlier, many patients who needed ustekinumab had the drug covered by Medicare Part B. For many years, Medicare Part B has been largely a passive purchaser of medicines. Part B covers drugs administered by physicians. Its longtime model has been to add a premium of 6% to the reported average sales price to reimburse physicians who buy and administer the drug for patients.
But it was Part D, the Medicare program based on insurers’ negotiating clout, that saw a spike in ustekinumab costs after patients were shifted out of Part B coverage, where the cost of the medicine fell.
The average reported Part B cost for an ustekinumab injection slipped from $14,450 in 2016 to $12,912 by 2023, according to the report from HHS’ Office of Inspector General (OIG).
The Part D cost jumped in the same period. It rose by 84% from $17,717 in 2016 to $32,559 by 2023.
The IRA is intended to curb these kinds of increases in the future for drugs covered by Medicare, said Stacie B. Dusetzina, PhD, professor of health policy at Vanderbilt University School of Medicine, Nashville, Tennessee. The law demands companies pay rebates to Medicare if they increase drug prices faster than consumer inflation.
“That should at least help with some of this price growth that over time has seemed quite egregious,” Dr. Dusetzina told this news organization.
The IRA contains several provisions intended to curb rising drug costs for people enrolled in Medicare, including allowing the federal government to directly negotiate on some medicines.
Ustekinumab is one of the first 10 medicines that are subject to negotiations. Medicare will select as many as 15 additional drugs covered under Part D for negotiation in 2025, another 15 Part B and D drugs in 2026, and up to 20 drugs every year after that.
Earlier in August, the Centers for Medicare & Medicaid Services (CMS) announced the results of its first drug negotiations, with prices set to take effect in 2026. The Part D price for a 30-day supply of ustekinumab will be $4695 in 2026, a 66% reduction from the list price last year of $13,836.
Even at the negotiated price, ustekinumab’s cost will be high enough to trigger a new cap on out-of-pocket Part D spending, Dr. Dusetzina said.
Starting in 2025, Part D will have a cap of $2000 on individuals’ out-of-pocket costs, with annual adjustments in future years.
“It may not be better for someone who was filling this on Part B, who had a supplement [that covered their share of the ustekinumab cost], but it will be better for a lot of people that it’s covered under Part D,” Dr. Dusetzina said. “The good news is that at least from a beneficiary affordability standpoint, they’re going to have some price protection.”
OIG noted that the US Food and Drug Administration has approved three competing biosimilar versions of ustekinumab. These could also potentially work to lower costs.
‘A Complicated and Not Particularly Transparent Process’
OIG said it expects to release a report later this year with more detail about the decision that shifted ustekinumab coverage from Part B to Part D.
First cleared for US sales in 2009, ustekinumab is approved for psoriasis, psoriatic arthritis, Crohn’s disease, and ulcerative colitis. It can be given subcutaneously or intravenously.
Part B does not generally cover self-administered drugs. The infused version of ustekinumab has been covered under Medicare Part B since it reached the market.
“However, Part B coverage of the subcutaneous versions has been less straightforward,” OIG said in the report.
In 2020, Medicare administrative contractors — the units or affiliates of insurers that for decades have processed Part B claims for the traditional Medicare programs — determined that subcutaneous ustekinumab did not meet the criteria for coverage under Part B. Implementation of this change was delayed due to the COVID public health emergency but has since taken effect.
The shift in ustekinumab coverage to Part D eroded financial protections of many people on Medicare when Part B covered the drug.
Almost 9 in 10 people enrolled in Medicare Part B have supplemental insurance such as Medigap, employer coverage, or Medicaid to fully or partially cover their cost-sharing requirements, the OIG report said. That means Part B coverage shielded many patients from high ustekinumab costs.
In contrast, patients who self-administered the drug at home under Part D coverage paid an average of almost $6000 out of pocket if they did not receive any type of financial assistance, OIG said.
“From a financial standpoint, as long as you have Part B coinsurance, it would be much cheaper to get the drug in your doctor’s office than getting it through a pharmacy, unless you qualify for the low-income subsidy,” OIG Regional Inspector General David Tawes, who supervised the team that produced the report, told this news organization.
OIG has previously reported that post–point-of-sale rebates paid by manufacturers sometimes lower the costs incurred by Part D plans by a significant margin. But this was not the case with ustekinumab. Instead, OIG said the gap between initial and actual costs of ustekinumab was reduced by less than one third even with rebates. Rebate information is considered confidential.
“The whole negotiation structure is a complicated and not particularly transparent process,” Mr. Tawes said.
Backchannel Discounts, Top-Line Prices
The IRA is bringing some more transparency to the process through negotiations, said Mariana P. Socal, MD, associate professor at the Johns Hopkins Bloomberg School of Public Health in Baltimore. Patients who buy medicines that have been through the CMS negotiation process will be able to see if they are being charged correctly.
Dr. Socal noted that there’s something of a disconnect in discussions of Part D between how insurers and consumers view prices.
For Part D plans, the list prices represent the beginning of negotiations. They get rebates from drugmakers’ list prices for medicines, which insurers say work to lower premium costs.
“For plans, those prices are unrealistic. They are simply a sticker price. But for patients, for the Medicare beneficiaries, these prices are very real” because they are used to set copays, Dr. Socal said.
Dr. Dusetzina reported receiving funding from Arnold Ventures and the Commonwealth Fund for research related to drug pricing. Dr. Socal reported receiving funding from Arnold Ventures.
A version of this article first appeared on Medscape.com.