in the Uni UNDER S TANDING Medicine Spending and Affordability in the United States UNDER S TANDING PAT IENTS ’ COS TS FOR MEDICINES AUGUST 2020 AUGUST 2020 Introduction There is a very public conversation about drug prices and costs occurring in the United States presently, but important parts of the discussion are obscured by the complexities and lack of transparency of the current pricing system. Most patients’ costs are low, continue to trend downward, and their share of total costs are declining. However, specific patient groups are facing prices that are rising and unaffordable to them, with consequences for their health and their financial wellbeing. The purpose of this report is to provide context and without industry or government funding. The inclusion clarity on the pricing of prescription medicines and of household income data from Experian plc is the consequences that result for patients. The report gratefully acknowledged for the contribution it makes includes information on the differing prices paid by to our understanding of patient cost sensitivity. The stakeholders, and by patients with different kinds of contributions to this report of Josh Adler, Kyle Crowell, insurance. Uniquely, the report combines prescription Bob Doyle, Brian Fallica, Emma Fleuette, Luke Greenwalt, cost data with household income data to illustrate how Bryan McDonald and A.J. Pappas, and dozens of others at affordability is a distinctly personal issue for patients IQVIA, are gratefully acknowledged. and their families. Furthermore, as patients are exposed to higher costs, one consequence is that they abandon necessary prescription medicines with potentially serious impacts on their health. With unprecedented levels of Find Out More unemployment during the current COVID-19 pandemic, If you wish to receive future reports from the IQVIA millions of Americans are at risk of losing their health Institute for Human Data Science or join our mailing list, insurance, which will likely impact their personal visit iqviainstitute.org assessment of affordability and their actions. MURRAY AITKEN The study was produced independently by the IQVIA Executive Director Institute for Human Data Science as a public service, IQVIA Institute for Human Data Science ©2020 IQVIA and its affiliates. All reproduction rights, quotations, broadcasting, publications reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without express written consent of IQVIA and the IQVIA Institute. Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines Table of Contents Overview 2 Medicine spending levels and trends 5 Patient out-of-pocket costs 11 Patient cost sensitivity 21 Insurance changes since COVID-19 24 Policies impacting medicine pricing 25 Appendix 27 Notes on sources 34 Definitions 34 Methodology 35 About the authors 36 About the Institute 38 iqviainstitute.org 1 Overview Manufacturer net sales have increased by $56 billion MEDICINE SPENDING LEVELS AND TRENDS introduction of new branded medicines, which drove Understanding the amount spent on medicines in the $68 billion of growth and increased use of existing United States requires looking at a range of measures protected brands that drove an additional $40 billion that apply to different stakeholders. Wholesaler of growth. These amounts were offset by a $70 billion Acquisition Cost (WAC) represents the “list price” set by reduction in sales of branded medicines that no longer manufacturers and is the basis for other prices in the have patent protection and face generic or biosimilar value chain, including payer responsibility and some competition. patient out-of-pocket costs. Total sales at WAC prices were $671 billion in 2019, growing at a 7.1% CAGR over the past five years. over the past five years with the increase driven by the Price increases on branded medicines contributed $21 billion to manufacturer net sales growth over the past five years, but have moderated significantly since Payer net spending is calculated after supply chain 2016. Year-over-year invoice price growth has slowed discounts, manufacturer rebates, and patient out-of- from 9.3% in 2016 to 5.2%, as manufacturers have pocket costs are deducted, and markups and margins responded to public calls to moderate price growth by intermediaries are added. Total net payer spending and intensifying market-based competition. Net price in 2019 was $509 billion and has increased at a CAGR of increases — after adjusting for rebates, discounts, other 4.1% over the past five years. price concessions, and patient coupons to reduce out-of- Manufacturer net sales is calculated after deducting negotiated rebates, discounts, and other forms of price concessions, such as patient coupons or vouchers that pocket costs — have also moderated from 2.9% in 2016 to 1.7% in 2019; the third consecutive year of increases lower than growth seen in the Consumer Price Index. offset out-of-pocket costs, and was $235 billion lower PATIENT OUT-OF-POCKET COSTS than overall payer and patient spending for medicines. Patients continued to pay more out of pocket for Total manufacturer net sales in 2019 were $356 billion prescription medicines in total, primarily due to and increased at a 4.6% CAGR over the past five years. increased usage through retail channels, although Patient financial responsibility for medical services includes costs associated with office visits, diagnostic tests, and hospital outpatient and inpatient services, but exclude out-of-pocket costs for prescription drugs. Such patient non-drug costs reached $260 billion in 2019, having risen at a 4.6% CAGR over the past five years. Patient out-of-pocket costs for prescription drugs include copayment and coinsurance costs associated with medicines dispensed through retail pharmacies, mailorder, or clinics and hospitals. These costs reached $82 billion, with $67 billion related to retail drugs and $15 billion related to non-retail drugs. Growth over the past five years was at a CAGR of 2.1% — with a 1.6% and 4.6% CAGR for retail and non-retail, respectively.  more prescriptions are being dispensed with $0 patient payment — 44% of all branded prescriptions in 2019, up from 36% in 2015 — and the final patient cost is dependent on insurance type and design. Patient outof-pocket costs for prescription medicines reached $82 billion in 2019, up from $74 billion in 2015, with growth primarily driven by increases in the retail channel, which accounts for $67 billion of the total out-of-pocket cost. The average amount paid out of pocket per retail prescription has risen from $10.34 in 2015 to $10.67 in 2019. Average patient costs for the commercially insured and Medicare have declined but costs for cash-paying patients have risen. Depending on plan design, these include prescriptions for the prevention and treatment of chronic disease including routine immunizations, contraception, aspirin for heart 2 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines disease (if with a prescription), some cancer medicines, prescription claims filled in 2019, followed by obesity, and also prescriptions dispensed after a patient asthma, COPD, stroke, and HIV drugs. These six therapy reaches maximum out-of-pocket levels. While 98.9% of areas account for 42% of total high-cost prescriptions. prescriptions dispensed carry a patient payment of less than $125, the remaining 1.1% represents some 69.0 million prescription in 2019, up from 60.7 million in 2015, but with the share of prescriptions unchanged. Medicare patients filling prescriptions under Part D paid $16.1 billion out of pocket, up 27% over the past five years — reflecting an 8.3 million (18.2%) increase in the over-65 population and a 13.7% increase due to greater use of medicines and shifts to drug that may have higher outof-pocket costs — offset by 5.2% lower per-prescription costs. Lower costs for Part D are driven, at least in part, by the closing of the so-called “donut hole” and patients with standard benefit now have a flat 25% coinsurance after the initial deductible up to catastrophic coverage. Patients covered by commercial insurance paid $36 billion out of pocket in 2019, down 5% since 2014, reflecting mix and volume changes, as well as greater use of coupons and vouchers provided by manufacturers. By law, coupons are not allowed to be used by patients using government insurance such as Medicare or Medicaid. Most patients have a fixed and relatively low copay amount per prescription, but for those whose plan design incorporates deductibles or coinsurance, which are generally based on list prices, these now account for 49% of all out-of-pocket costs. When aggregating costs at a patient level annually, 90% of all patients pay less than $500 in out-of-pocket costs for the full year. In the case of Medicare Part D patients, 20% pay more than this, in part due to the plan design for standard benefit plans, and partly due to their inability to offset costs through manufacturer coupons. The high cost of these prescriptions are often offset by coupons among patients in commercial plans, which reduce total cost-exposure by 40% in the case of oncology drugs, by 60% in the case of diabetes drugs, and by over 80% in the case of anticoagulants. Insulin costs an average of $31 out of pocket per month, however 24% of diabetes prescriptions cost more than the $35 cap to be implemented in 2021 by plans participating in the Medicare Part D “Senior Savings Model.” Several states have adopted similar caps, but thus far only three of the ten planning to sign the legislation are at or below the $35 cap. While these caps have the potential to lower patient costs in 2021 and beyond, if all patients nationally had insulin costs capped at $35, annual outof-pocket savings would be $837 million ($233 million in commercial, $279 million in Medicare, and $326 million for the uninsured paying cash). However, these savings may not result in overall savings to patients if they simply result in per prescription caps but take patients longer to reach their deductible, out-of-pocket maximum, or other plan thresholds. Without also having caps on other medicine costs or changes in benefit designs, there is little to prevent costs from shifting to later in the year or to other medicines for the same patient. There is also the potential that capping costs for some patients may drive up premiums for others. PATIENT COST SENSITIVITY Controlling cost exposure is a critical issue. However, the abandonment of prescriptions at retail pharmacies remains a key public health concern, since this represents patient care that is recommended by a Medicines with high patient cost exposure (>$125) physician but not followed by the patient. In 2019, 9% of account for a small share of all prescriptions, but bring all prescriptions were abandoned. Abandonment rates a high burden to patients and can only be offset by are less than 5% when the prescription carries no out-of- coupons or vouchers in commercial plans. These include pocket cost, but rise to 45% when the cost is over $125 diabetes drugs, which account for one-in-five high-cost and 60% when the cost is over $500. iqviainstitute.org 3 Patient income level has an important impact on with implementation potentially phased in over the abandonment. For example, for prescriptions of following year or longer. These include benchmarking diabetes, anticoagulants and cancer medicines costing U.S. prices to other developed markets, changing the between $125 and $250, abandonment is 40% for anti-kickback provisions to force rebates to be given to patients with household income of more than $100,000, patients at the point of sale, and allowing reimportation and nearly 50% for those with household income less from other lower-priced markets. A rule to ensure that than $25,000. the low purchase prices for insulins and epinephrine INSURANCE CHANGES SINCE COVID-19 Related to insurance types and income is the unprecedented unemployment occurring as a result of the COVID-19 pandemic, and the risk that millions of Americans will lose insurance coverage. Analysis of prescription abandonment patterns suggests the potential impact on these patients if they lose coverage. To date, fewer patients have lost commercial coverage be passed to consumers at so-called federally qualified health centers, would see the costs of these lifesaving medicines drop to pennies. The details on all of these proposals have not yet been published and face significant hurdles as several are contingent on avoiding increases to other system costs such as premiums, other patient out-of-pocket costs or the federal deficit, which could make them difficult to implement. in 2020 than in 2019, despite the pandemic-related At a state level, policies include pushes for greater unemployment, suggesting that employers have financial transparency, copay caps — both generally and retained insurance coverage for furloughed workers for insulins specifically — and anti price-gouging policies through June at least. The extent to which this largesse to prevent sharp increases. In fact, since 2015, 36 states continues and employees can retain the ability to have either enacted or actively advanced legislation to purchase COBRA coverage if they lose employment, address one or more of these four policy categories. will depend heavily on the provision of unemployment New York has enacted policies in all four categories payments from state governments and potentially while Colorado, Illinois, Louisiana, Maryland, Maine, New additional rounds of federal stimulus payments. In the Jersey, Vermont, Washington, and West Virginia have absence of these funds, millions of Americans could lose each addressed policies in three of these. Regardless of coverage and be faced with unaffordable medicine costs. the number of policies or their specific characteristics, POLICIES IMPACTING MEDICINE PRICING Beyond these immediate concerns, both federal and state policymakers have been addressing drug costs through a variety of policies, particularly related to affordability dynamics. The Trump administration has announced six policies in recent months, through rulemaking authority or via executive orders, relating to it is currently unclear if any of them have, or could have, a material impact on prices because existing state and federal regulations limit what state legislators can accomplish. The continuing fragmentation of pricing policy by insurance type, and under federal and state jurisdictions, will perpetuate the dynamic where drug pricing depends considerably on who is paying. Medicare and private insurance, that have potential impact on patient drug costs. The implementation of these rules and orders are intended to take effect in 2021, such as the IRS rule allowing lower costs during the deductible period in participating plans, and the Senior Savings Model, which allows a low-cost diabetes plan design within the Medicare cost-sharing model. Four other policies were announced in late July 2020 4 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines MEDICINE SPENDING LEVELS AND TRENDS Diverse measures of medicine spending illustrate differing trends depending on the party doing the spending Exhibit 1: Medicine Spending at Selected Reporting Levels, US$Bn Spending level 671 509 5-year CAGR WAC 7.1% Payer net spending 4.1% Manufacturer net 4.6% 396 359 356 Patient out-of-pocket non-drug 4.6% 262 260 Patient out-of-pocket total drug 2.1% Patient out-of-pocket retail 1.6% Patient out-of-pocket non-retail drug 4.6% 179 82 67 15 76 65 11 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: IQVIA Institute, Jun 2020; CMS National Health Expenditures (NHE), Dec 2019 • Overall spending trends reflect shifts in the prices of medicines, as well as changes in volume and mix of products used. • Over the past five years, spending at list prices [Wholesaler Acquisition Cost (WAC)] has increased from $477 billion to $671 billion — an average of 7.1% per year. • Manufacturer net revenues from these sales, including all products, are estimated to have grown an average of 4.6% over five years and 5.2% from 2018 to 2019. • Patient out-of-pocket costs for drugs dispensed in a retail setting had been declining up to 2017, but have increased 8% and 3% in the past two years, respectively, resulting in a five-year average growth of 1.6% per year. • Insurers are responsible to reimburse pharmacies and/or providers to cover the invoice costs of medicines provided to covered patients, less the patient out-of-pocket costs. The rebates payers receive from manufacturers lower their net spending and may limit the need for premium increases or contribute to the profits of pharmacy benefit managers (PBMs) or insurers. • Manufacturer net revenue is lower than other measures of spending based on a combination of statutory discounts to Medicaid, discounts for 340b eligible institutions, the branded pharmaceutical fee in the ACA, donut-hole subsidies in Medicare Part D, supply chain discounts (often for generic drugs), as well as the value of coupons given to patients. • Payers benefit from all of these discounts except patient coupons. Exhibit notes: IQVIA Audits include measures of sales at Wholesaler Acquisition Cost (WAC) or list prices. Additionally, the IQVIA Institute has analyzed company reported net revenues for a sample of companies and products and projected a total market estimate (see Methodology section). Payer net spending reflects the total amount spent by payers for medicines in both retail and non-retail settings, including all insurance types and cash paying patients, offset by the estimates of rebates or payments that reduce payer responsibility. Payer net spending is derived from an analysis of CMS National Health Expenditure (NHE) data, IQVIA audited sales, and IQVIA estimates of manufacturer invoice-level and net revenue. Patient out-of-pocket costs are derived from CMS NHE. Due to lag-times in reporting, CMS-derived measures are projections for 2019 while IQVIA-derived metrics are actual. iqviainstitute.org 5 MEDICINE SPENDING LEVELS AND TRENDS There are large differences between list prices and the amounts spent by payers and patients or received by manufacturers Exhibit 2: Differences Between Various Spending Levels for U.S. Prescription Medicines in 2019, US$Bn WAC to Payer Net Spending 671 160 224 WAC to Manufacturer Net Revenue 143 671 82 Patient Initial Exposure Offset by Coupons 160 509 143 12 356 Value Increases 12 82 Pa co tie st nt ex ini po tia Co su l up re on s in re ta Pa il t ou ie t-o nt f-p dru oc g ke t W in Su AC vo p ic pl e y di ch sc a Re ou in ba nt te s s to pa ye rs Co up on M an s ne ufa t r ct ev ur en er ue s in W vo Sup AC i p ce l M y di ch ar sc a ku ou in ps nt an s d m ar Re gi ba ns t e Pa s to tie pa nt ye ou rs t-o f-p oc Pa k ye co et rn st et s sp en di ng 94 Decreases Source: IQVIA Institute, Jun 2020; CMS National Health Expenditures (NHE), Dec 2019 • Wholesaler acquisition costs (WAC) are often reported • Manufacturers offer supply chain discounts, rebates and represent list prices that influence the costs paid to insurers, and coupons to patients resulting in net by others in the supply chain and some patients. WAC revenues of $356 billion, $315 billion lower than at does not reflect elements like discounts and rebates WAC prices. which cause significant differences in the prices experienced by various stakeholders and individuals. • Payers, in aggregate, paid $509 billion in 2019 for • Patient costs are much lower overall due to insurance coverage but still represent a substantial amount: $82 billion in 2019. This value accounts for $12 billion medicines, including those paid through a patient’s in savings for patients as a result of manufacturer medical benefit for doctor-administered drugs or coupons, but excluding the use of manufacturer- drugs used during a hospitalization, which are often provided pre-paid debit cards. excluded from official statistics. Exhibit notes: IQVIA Audits include measures of sales at Wholesaler Acquisition Cost (WAC) or list prices. Additionally, the IQVIA Institute has analyzed company reported net revenues for a sample of companies and products and projected a total market estimate (see Methodology section). Payer net spending reflects the total amount spent by payers for medicines in both retail and non-retail settings, including all insurance types and cash paying patients, offset by the estimates of rebates or payments that reduce payer responsibility. Payer net spending is derived from an analysis of CMS National Health Expenditure (NHE) data, IQVIA audited sales, and IQVIA estimates of manufacturer invoice-level and net revenue. Patient out-of-pocket costs are derived from CMS NHE. Due to lag-times in reporting, CMS-derived measures are projections for 2019 while IQVIA-derived metrics are actual. 6 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines MEDICINE SPENDING LEVELS AND TRENDS Manufacturer net revenues increased by $56 billion over the past five years primarily driven by new products and brand volume Exhibit 3: Net Manufacturer Revenues and Growth 2014–2019, All Channels, US$Bn 40 -70 21 4 -7 68 17.3 300 2015 13.8 3.7 9.9 5.0 12.4 2019 New brands Protected brands price Protected brands volume Manufacturer net revenue LOE 1.6 356 -2.8 -21.1 -9.4 2014 4.0 2.6 Generics price Growth Generics volume 2019 Declines Source: IQVIA Institute Jun 2020 • New products, including 223 new active substances • Losses of Exclusivity (LOE), or patent expiries, typically that launched from 2014 through 2019, contributed result in a dramatic shift of volume to generics and $68 billion to net manufacturer revenue growth over also lower brand sales for the originator. These the past five years. contributed a decline of $70 billion to manufacturer • Price increases for protected brands, which have slowed substantially in recent years, contributed net revenues. • The impact of LOE has been trending upwards during $21 billion to growth over five years, averaging a 1.3% the past five years. While it had a large impact earlier increase per year. in the decade, it reached a low point in 2015 with a • Volume growth experienced by protected brands — most often driven by brands in the 3–5 year period since their launch when adoption by HCPs grows — negative contribution of $9.4 billion, but increased steadily to a contribution of -$21.1 billion in 2019. • During the past five years, generic prices had some contributed $40 billion to growth over the five periods of significant increases and periods of decline year period. that have offset those, resulting in overall net negative generic price-driven growth over the past five years. Exhibit notes: IQVIA estimates of net manufacturer revenue and growth are based on comparisons of IQVIA audited data and company reported net revenues (see Methodology section). Products are assigned to segments in each month based on time relative to launch or patent expiry and product type. Growth is calculated annually on a like-for-like product segment basis and then aggregated to five year totals. iqviainstitute.org 7 MEDICINE SPENDING LEVELS AND TRENDS List price growth for protected brands was 5.2% in 2019, while net price growth is estimated at 1.7%—the third year at or below the CPI Exhibit 4: Wholesaler Acquisition Price Growth and Net Price Growth for Protected Brands 9.3% 7.9% 7.0% 6.6% 5.2% 2.9% 1.6% 2.1% 0.7% 2015 2016 Brands WAC price growth % 2.3% 2.1% 1.9% 2.1% 0.3% 1.7% 2018 2019 2017 Estimated net price growth % CPI Source: IQVIA Institute, National Sales Perspectives, Dec 2019; Bureau of Labor Statistics, CPI Data, Dec 2014–Dec 2019 • The list prices of protected branded products — those • Most discounts are offered to wholesalers and products more than two years after launch having not pharmacies and do not necessarily result in lower out- yet lost patent protection — have been rising over 5% of-pocket costs for patients. per year for the past five years, but with a slowing rate of growth year by year. • Some of the rebates and other price concessions manufacturers pay (resulting in lower net prices) are • Net manufacturer prices — the cost of medicines after statutory payments to government programs like all discounts and rebates have been paid — have been Medicaid. Price concessions also include coupons growing at an average of less than 2% over the past offered to patients using private insurance, whereas five years and below inflation for the past three years. those with government insurance cannot use coupons. • Prices paid by different stakeholders in the U.S. health • These complexities mean that the price for each system are based to varying degrees on list prices and medicine can be unique, reflecting the drug, the the discounts and rebates they negotiate or receive insurance type, the other medicines a patient takes and do not apply uniformly to all parties. during the year, the time of year, the pharmacy, the coupons offered by manufacturers, and whether a patient chooses to use them. Exhibit notes: CPI = consumer price index 8 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines MEDICINE SPENDING LEVELS AND TRENDS Out-of-pocket costs have been rising, mostly in retail pharmacy Exhibit 5: Aggregate Patient Out-of-Pocket Cost for Medicines Dispensed in Retail and Non-retail Settings, US$Bn 74 75 79 74 13 13 14 61 62 60 2015 2016 2017 Out-of-pocket retail 15 82 15 65 67 2018 2019 Out-of-pocket non-retail Source: IQVIA Xponent, IQVIA LAAD Sample Claims Data, Jan 2015–Dec 2019; IQVIA Institute, Jun 2020; CMS National Health Expenditures (NHE), Dec 2019 • Retail pharmacy out-of-pocket costs have risen from • Among commercially insured patients on branded $61 billion in 2015 to $67 billion in 2019 though some medications, 16% of them used coupons to reduce patients have seen their costs decline during this their out-of-pocket costs in 2019. period (see Exhibit 7). • Patients with some types of insurance, including • Patient out-of-pocket costs for non-retail medicines reached $15 billion in 2019 up from $13 billion in 2015, Medicare Part D or high-deductible private health but these generally represent a smaller share of total plans, have seen their costs rise in line with the rising costs as more patients reach deductibles or out-of- list prices of drugs, but be offset by the Medicare pocket maximums if they’ve been hospitalized or “donut hole” subsidy program or the use of coupons, received more serious treatments administered by a respectively. physician. • As out-of-pocket costs have risen, coupons for commercially insured patients have reached $12 billion in 2019 — up 50% from $8 billion in coupon offsets in 2013 — helping to lower commercially insured patients’ out-of-pocket costs over the period. Exhibit notes: OOP costs are estimated based on prescription volumes and observed OOP costs. OOP costs are projected from a sample in the IQVIA LAAD sample claims data to a national estimate using national adjusted prescriptions, which were back-projected to estimate the trend prior to a trend break after 2016 due to restatement of NPA volumes (see Methodology). iqviainstitute.org 9 MEDICINE SPENDING LEVELS AND TRENDS Medicare costs have increased by 27% over the past five years, driven by an aging population and increased use, offset by declining prices Exhibit 6: Aggregate Patient Out-of-Pocket Cost for Prescriptions and Value Offset by Coupons Out-of-Pocket Costs in 2019 $67Bn Medicare Part D Out-of-Pocket Costs Indexed to 2014 Value ($12.7Bn = 100) 21% 2% 5.2 13.7 54% 5% 23% 18.2 27% 126.7 100.0 21% 5–year % OOP change per pay type 13% Cash Commercial Medicaid Medicare Part D 2014 $12.7Bn Population Volume and growth mix growth Out-of-pocket costs Price growth Growth 2019 $16.1Bn Declines Source: IQVIA Xponent, IQVIA LAAD Sample Claims Data, Jan 2015–Dec 2019; US Census Bureau; IQVIA Institute, Jun 2020; CMS National Health Expenditures (NHE), Dec 2019 • Medicare out-of-pocket costs grew, in aggregate, from • The amount of volume and mix growth is likely $12.7 billion to $16.1 billion over the past five years, to be related to the closure of the donut hole, as up 27% over five years, with 68% of the growth from patient out-of-pocket costs under the policy are now population aging as 8.3 million more Americans are 75% lower, and associated abandonment rates are now over 65 years old. substantially lower. • The average out-of-pocket cost per prescription for • Commercially insured patients or “third party” insured Medicare beneficiaries declined by 5.2%, from $279 saw their out-of-pocket costs decline 5% over five years, per person to $264 (not shown), excluding the impact while cash and Medicaid patients saw their aggregate of volume and mix changes. This resulted in total out-of-pocket costs increase by double-digits. savings of $700 million over the same five year period, including the impact of closing the donut-hole. • Increasing use of medicines overall and/or shifts to • Patients paying cash account for 21% of overall patient out-of-pocket costs but only for about 5% of prescriptions, while Medicaid patients account for 16% those that may have higher out-of-pocket costs added of prescriptions and 2% of patient out-of-pocket costs $1.7 billion (not shown), a 13.7% increase in aggregate (see Appendix). over five years, and a 51% contribution to the increase in seniors’ out of pocket costs. Exhibit notes: OOP = out-of-pocket. OOP costs estimated based on prescription volumes and observed OOP costs. OOP costs were projected from a sample in the IQVIA LAAD sample claims data to a national estimate using national adjusted prescriptions. Note, method of payment is determined based on the most common or mode pay type in recorded claims. Cash method of payment includes those where patients used no insurance, including those who received some assistance from charities, foundations or other programs, or where a mode pay type was impossible to determine. Volume and mix growth is the remainder of all growth minus population and price growth. 10 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines PATIENT OUT-OF-POCKET COSTS The average amount paid out-of-pocket per retail prescription has risen from $10.34 in 2015 to $10.67 in 2019 Exhibit 7: Average Final Out-of-Pocket Cost per Retail Prescription by Product Type and Method of Payment, 2015–2019 All Products Brand Generic $105.74 $50.78 $93.62 $43.67 $36.77 $27.25 $10.83 $10.34 $7.03 $10.67 $8.90 $6.72 $0.60 $0.41 2015 2016 2017 2018 $27.72 $27.57 $24.60 $0.66 $0.95 2019 Commercial $26.25 $25.25 $22.61 2015 2016 Medicare 2017 2018 Medicaid 2019 $8.09 $6.36 $4.06 $0.37 $6.95 $6.80 $4.01 $0.53 2015 2016 Cash/Assistance 2017 2018 2019 All payers Source: IQVIA LAAD Sample Claims Data, Jan 2015–Dec 2019 • Overall, average out-of-pocket costs are not rising • Some Medicare patients do receive support from rapidly, with an average increase of only $0.33 over charitable foundations, which are reflected in their five years to $10.67 across all products and all payers. final out-of-pocket costs here. • Uninsured patients paying with cash have seen costs rise for all types of products from $36.77 to $50.78 per prescription over five years, with brands specifically increasing from an average of $93.62 to $105.74. • Medicare patients have seen average costs decline • Commercial brand prescriptions averaged $22.61 in 2019 down from $27.57 in 2015. • For generics, commercial and Medicare patients have seen their costs largely unchanged while cash-paying patients saw costs rise from $27.25 to $43.67 in 2019. from $7.03 to $6.72, while commercially insured patient prescription costs have declined from $10.83 to $8.90. • Medicare patients have seen brand prescriptions increase from $24.60 to $25.25 average cost. By law, Medicare patients cannot use coupons, which commercial patients used for 16% of brand prescriptions in 2019. Exhibit notes: Includes paid claims only for patients filling at least one prescription. Prescriptions in retail pharmacies were adjusted to consistent 30-day prescription lengths for cost and volumecomparison purposes. iqviainstitute.org 11 PATIENT OUT-OF-POCKET COSTS Over 90% of branded and generic prescriptions have a final out-ofpocket cost below $20, and only 1.1% have a cost above $125 Exhibit 8: Distribution of Prescriptions by Out-of-Pocket Cost in 2019, All Channels 100% Brands Only All Prescriptions: Brands and Generics $500+ $400–$499.99 90% $300–$399.99 $250–$299.99 80% $200–$249.99 70% $150–$199.99 $125–$149.99 60% 98.9% below $125 50% 40% $75–$124.99 96.4% below $125 $50–$74.99 $40–$49.99 $30–$39.99 30% $20–$29.99 20% $10–$19.99 $0.01–$9.99 10% 0% $0 2015 2019 2015 2019 Source: IQVIA LAAD Sample Claims Data, Jan 2015–Dec 2019 • Over 90% of all prescriptions have final out-of-pocket • Many patients have paid lower costs year-over-year costs below $20 (blue bands, left chart), which is up 1.3 due to a variety of shifts in benefit designs, coupon percentage points from 2015. programs, patient assistance programs, rising • Branded prescriptions with final out-of-pocket costs below $20 account for 71% of brands filled in 2019, up from 65% in 2015. • Out-of-pocket costs above $125 for a normalized monthly prescription account for 1.1% or 69.0 million prescriptions, up from 60.7 million in 2015. • Only 3.6% of branded prescriptions have out-of-pocket costs above $125, down from 3.8% in 2015. Medicaid enrollment, and mandated supports, such as the Medicare Part D donut-hole subsidy. • While few patients fill them, abandonment is higher at higher prescription cost levels, and those prescriptions may be underrepresented as those prescriptions might have been abandoned due to cost (see Exhibit 17). • A rising number of prescriptions are now dispensed with a $0 payment by the patient, and now amount to 44% of all branded prescriptions in 2019, up from 36% in 2015. Exhibit notes: Includes paid claims only for patients filling at least one prescription. Prescriptions in retail pharmacies were adjusted to consistent 30-day prescription lengths for cost and volume comparison purposes. 12 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines PATIENT OUT-OF-POCKET COSTS High-cost prescriptions represent only 1.1% of overall claims and predominantly affect those in commercial and Medicare plans Exhibit 9: High-Cost Claim Exposure (>$125) by Payment Type, 2019 Brands and Generic Prescriptions >$125 = 1.1% Brand Prescriptions Only >$125 = 3.6% Cash 11% Cash 29% Assistance 10% Commercial 35% Commercial 44% Assistance 11% Medicare 35% Medicare 25% Source: IQVIA LAAD Sample Claims Data, Jan 2015–Dec 2019 • High-cost prescription claims are primarily split • In Medicare, high-cost claims for brands represent between Medicare and commercial plans, with 9.1% of overall brand Medicare claims, compared to commercial having a larger share of high-cost 7.2% of commercial, due to both the benefit design prescriptions in line with its’ larger share of in Part D and potentially to the disease burden many overall claims. seniors face. • Of all insured patients, Medicare patients are most • Commercial insurance and Medicare account for 60% likely to experience a high-cost claim due to high of high-cost claims over $125, while cash payment is exposure phases of the Part D benefit design. made for 29%. • High-cost claims are more common for brands, with • Cash prescriptions represent only 5% of prescriptions, 3.6% of brand claims costing more than $125, and but for cash-paying patients their lack of insurance 79% of those claims covered by commercial insurance contributes to their much higher share of exposure to or Medicare. high costs. Exhibit notes: Includes approved claims for patients filling at least one prescription. Prescriptions in retail pharmacies were adjusted to consistent 30-day prescription lengths for cost and volume comparison purposes. iqviainstitute.org 13 PATIENT OUT-OF-POCKET COSTS Final out-of-pocket costs for commercial claims in the deductible period increased slightly, while coinsurance and copays declined Exhibit 10: Primary Cost Exposure and Final Out-of-Pocket Cost by Benefit Design Over Time, Branded Products, Commercial Only $450 Deductible – primary exposure $400 Deductible – final OOP $350 $300 Coinsurance – primary exposure $250 $200 Coinsurance – final OOP $150 $100 Copay – primary exposure $50 Copay – final OOP $0 Q1 Q2 Q3 2015 Q4 Q1 Q2 Q3 2016 Q4 Q1 Q2 Q3 2017 Q4 Q1 Q2 Q3 2018 Q4 Q1 Q2 Q3 2019 Q4 Source: IQVIA LAAD Sample Claims Data, Jan 2015–Dec 2019 • As primary cost exposure has risen for patients with • Coupons and benefit designs combine to influence the deductible or coinsurance benefit designs, final out- final out-of-pocket costs patients pay. Cost exposure of-pocket costs after insurance adjustments have not is often driven by list price and benefit designs risen as much. typically include a deductible followed by a period • For those spending in the deductible period, they are spending on average $200–260 per quarter per brand, with higher amounts at the beginning of the year, while those with coinsurance spend less, averaging $80–100. • Patients with standard copays, in what is often called traditional insurance, have the lowest cost exposure, which has declined on average from $11 to under where coinsurance or copays are required, where costs can be potentially offset if a patient receives a manufacturer coupon. • In recent years, some plans have developed benefit designs where coupons do not contribute or “accumulate” to deductible spending, with the plans called “accumulators”, though these impact only a small percentage of overall prescriptions. $9 per medicine, but notably these patients often pay the highest insurance premiums. Exhibit notes: For the purposes of this analysis, all claims have been assessed by the proportion of patient exposure and patient and payer initial pay amount. Deductible claims are defined as those where the patient would pay more than 50% of the claim, and the primary patient payment is >$250. Coinsurance claims are defined as those where the patient pays 5–25% of the cost with primary payment from $75–250, or where patient share is 5–50% and primary patient payment is >$75. Copay claims have been determined based on a primary patient copay less than $75. 14 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines PATIENT OUT-OF-POCKET COSTS Most patients have fixed copays, but for those with deductibles and coinsurance, these make up 48.6% of all out-of-pocket costs Exhibit 11: Share of Branded Commercial Claims and Out-of-Pocket Costs by Benefit Design Cohort Proportion of Claims 100% Proportion of Final Out-of-Pocket Costs 90% 80% 70% 60% 50% 92.4% 91.8% 91.3% 90.8% 54.0% 51.4% 32.1% 34.3% 12.3% 13.9% 14.3% 2017 2018 2019 62.1% 58.1% 26.0% 29.6% 8.7% 12.0% 2015 2016 65.9% 90.5% 40% 30% 25.4% 20% 10% 0% 6.7% 7.2% 7.7% 8.2% 8.6% 0.9% 2015 1.1% 2016 1.0% 2017 1.0% 2018 0.9% 2019 +1.9% since 2015 Deductible Coinsurance +14.5% since 2015 Copay Source: IQVIA LAAD Sample Claims Data, Jan 2015–Dec 2019 • Though claims with a copay benefit design make • A high-deductible plan (HDHP) may have a much up the highest proportion of claim volume, deductible lower plan premium and larger deductible, typically and coinsurance claims make up almost half of includes a coinsurance phase after the deductible out-of-pocket spending in 2019, and this proportion spend is reached, and often includes an out-of-pocket is increasing. maximum amount for the year. • Plan designs vary considerably, and while there are • Plans of all types may include a coinsurance payment three main types of payment (i.e., copay, coinsurance for some higher-cost medicines, often called a and deductible), some plans include more than one specialty tier. of them. • Some standard copay plans have deductibles as part of • List prices for drugs, which are used as the basis for calculating coinsurance or deductible claims, cause the plan design, though these are typically lower than more patients to pay higher costs out-of-pocket those in so-called high-deductible plans. through these various insurance mechanisms. • Nearly all high-cost prescriptions are paid as part of coinsurance or deductible components of insurance plans. Exhibit notes: For the purposes of this analysis, all claims have been assessed by the proportion of patient exposure and patient and payer initial pay amount. Deductible claims are defined as those where the patient would pay more than 50% of the claim, and the primary patient payment is >$250. Coinsurance claims are defined as those where the patient pays 5–25% of the cost with primary payment from $75–250, or where patient share is 5–50% and primary patient payment is >$75. Copay claims have been determined based on a primary patient copay less than $75. iqviainstitute.org 15 PATIENT OUT-OF-POCKET COSTS Two-thirds of oral oncology prescriptions are zero cost to patients — a much higher proportion than in diabetes or for anticoagulants Exhibit 12: Final Out-of-Pocket Cost Distribution for Brands in 2019 Across All Pay Types in Select Therapeutic Classes 100% $1000+ 90% $500-$999.99 80% $250-$499.99 70% $125-$174.99 $75-$124.99 60% $50-$74.99 50% $40-$49.99 40% $30-$39.99 30% $20-$29.99 20% $10-$19.99 $0.01-$9.99 10% 0% $0 Diabetes Anticoagulants Oncology Source: IQVIA LAAD Sample Claims Data, Jan 2015–Dec 2019 • Diabetes, anticoagulants, and oral oncology medicines • The range of costs in these classes suggest that represent three therapeutic classes with quite different some patients may have zero cost while others pay costs per drug, as well as varying dynamics per patient over $1000 for the same medicine, though this could during the year. happen to the same patient at different times of • Oral oncology drugs include older medications taken over long-time periods, such as those taken to prevent the year. • All three of these therapeutic classes would result in recurrence of breast cancer, as well as more novel significant worsening of clinical outcomes if patients therapeutics, which are sometimes associated with were to forego treatment due to costs. substantial costs. • The older therapies can qualify for zero-dollar copays under the ACA, while higher-cost medications often contribute to a patient reaching out-of-pocket maximums in a commercial plan and having zero outof-pocket costs for that prescription. Exhibit notes: ACA = Affordable Care Act 16 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines PATIENT OUT-OF-POCKET COSTS Overall, 10% of patients reach annual out-of-pocket costs above $500 compared to 20% in Medicare in large part due to benefit design Exhibit 13: Patients by Annual Prescription Out-of-Pocket Cost in 2019 All payers 184Mn Medicare 36Mn $1,250-$1,499.99 $1,000-$1,249.99 $750-$999.99 $500-$749.99 4Mn HIX $400-$499.99 $300-$399.99 109Mn Commercial $200-$299.99 8Mn FFS Medicaid $100-$199.99 $50-$99.99 Managed Medicaid 0% $1,500+ 27Mn $1-$49.99 $0 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: IQVIA LAAD Sample Claims Data, Jan 2015–Dec 2019 • Across all pay types, 9.9% of patients pay more than $500 and 2.3% pay more than $1,500 out-of-pocket for prescriptions. • In Medicaid, only 1.3% of patients pay more than $500 out-of-pocket for prescriptions, and only 0.3% pay more than $1500, and these most likely relate to patients on a different kind of insurance for part of the year. • In Medicare, 20% of patients pay more than $500 outof-pocket — the amount where cost-sharing starts for • As a result, seniors have higher cost exposures than the commercially insured population. • In commercial coverage, 9.4% of patients pay more than $500 and 2.0% pay more than $1,500. • With the average deductible in commercial near $1,000 per year for an individual and Medicare Part D deductible at $185 per year, the cost exposure of Medicare Part D patients represents a potentially significant cost barrier to adherence. patients with standard coverage under Medicare Part D, and patients become responsible for 25% of costs. Five percent (5.0%) also pay more than $1,500. Exhibit notes: Patients who filled at least one prescription in our sample were included. Patients were grouped into cohorts by mode pay type and costs aggregated in the year. iqviainstitute.org 17 PATIENT OUT-OF-POCKET COSTS There are significant differences across therapy areas in the costs patients are exposed to and their final costs Exhibit 14: High-Cost Claim Exposure and Elements of Cost Exposure by Therapeutic Class for Brands in Commercial Insurance in 2019 Share of High-Cost Claim (>$125) Initial Cost Exposure Average Prescription Cost Exposure, Coupon Buy-Down and Final Out-of-Pocket Costs Oncology 18% 14% Diabetes Obesity 5% 41% 3% 5% 5% 6% 4% 4% 5% Anticoagulants 4% Asthma COPD 59% $222 41% $61 Diabetes Stroke 86% HIV/AIDS Depression 38% Uveitis $59 Acne 62% Infertility Total cost exposure Buy-down Final OOP cost All other Source: IQVIA LAAD Sample Claims Data, 2019 • The therapeutic areas with the largest proportion of • Oral branded therapies in oncology — often newer high cost claims include both specialty therapy areas, therapies with significant overall prices — have an which may be covered with coinsurance in so-called average cost exposure of $222, as some patients “specialty tiers”, and lifestyle products, which may not reach their deductibles and are exposed to lower costs be covered by plans. afterwards. • Final out-of-pocket costs are reduced in several of these • Final out-of-pocket costs for a month of oral oncology therapy areas through the use of coupons or if patients therapies — often life-extending medicines — average reach deductibles or out-of-pocket maximums. $130, with coupons off-setting an average of $92. • Patients with diabetes make up 18% of high-cost claims • In the anticoagulant market, several newer medicines initial cost exposure, but only 5% of final out-of-pocket in direct competition with each other offer coupons for high-cost claims. Average cost exposure is $59, also resulting in zero patient cost and average final out-of- including a mix of benefit designs, with some patients pocket costs of just $9 in this market. exposed to the full cost of brands costing over $500 per month, and others exposed to fixed copays often less than $30. Coupons reduce patient costs to an average $23. • The variations in patients’ specific insurance plans, formularies, and the coupons offered for specific medicines make it exceedingly difficult for a patient to determine if they are getting the best possible price for their circumstance. Exhibit notes: Includes paid claims only. Prescriptions in retail pharmacies were adjusted to consistent 30-day prescription lengths for cost and volume comparison purposes. 18 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines PATIENT OUT-OF-POCKET COSTS Although insulin costs $31 on average, a significant percentage of these prescriptions cost more than the $35 cap proposed in new rules Exhibit 15: Average Insulin Final Out-of-Pocket Costs Across All Payers in US$ and Percentage of Prescriptions by Pay Type with Final Out-of-Pocket Cost Above $35 $31.47 63% $33.81 $35.70 56% 56% 35% 36% 31% 32% 2013 2014 $35.36 $33.97 52% 53% 34% 33% 32% 33% 33% 2015 2016 28% 2017 $33.63 55% $31.40 58% 32% 31% 24% 22% 2018 2019 Insulins average final OOP cost Cash above $35 Medicare above $35 Commercial above $35 Source: IQVIA LAAD Sample Claims Data, Jan 2013–Dec 2019 • The average cost of insulin prescriptions in 2019 • Only a subset of Medicare patients have higher out-of- was $31.40, down from a peak of $35.70, but with pocket costs, as others are dual-eligible with Medicaid significant differences across insurance types and and receive Low income subsidies (LIS) or enroll in individual patients. Medicare Advantage plans with lower copays or have • In total, 24% of prescriptions cost patients more than $35, and those higher-cost prescriptions averaged $106.78 in final out-of-pocket costs. • Of prescriptions costing more than $35, 22% were in commercial plans, 31% in Medicare, and 58% in cash. • This $35 per month threshold has been proposed for Medicare plans that offer the “Senior Savings Model” Employer Group Waiver plans (EGWP), where they receive generous benefits in Part D after retirement. • Because of issues and fragmentation affecting both commercial insurance and Medicare, some patients may have the cost of each insulin prescription capped but others may not save money having already reached their deductible or already having a lower out-of-pocket cost. for their 2021 plan year, or some newly enacted state policy copay cap policies that would benefit Medicare and commercially insured patients in those states, but stop short of assisting the uninsured or cash-paying patients (see Exhibits 21 and 22). Exhibit notes: Prescriptions in retail pharmacies were adjusted to consistent 30-day prescription lengths for cost and volume comparison purposes. Final out-of-pocket cost reflects the final patient responsibility after insurance and the use of coupons or other assistance for cash or commercial patients. Savings calculated as out-of-pocket cost minus $35 per prescription for prescriptions costing above $35. Savings could be offset in future if lower-cost prescriptions have higher costs. iqviainstitute.org 19 PATIENT OUT-OF-POCKET COSTS Capping insulin costs at $35 per month could save Americans $837 million in prescription costs Exhibit 16: Number of Insulin Prescriptions with Final Out-of-Pocket Cost Above and Below $35 in 2019 and Potential Savings if Costs Were Capped at $35 per Month, US$Mn Total Insulin Prescriptions by Final Out-of-Pocket Cost, Mn Total Out-of-Pocket Costs by Pay Type, US$Mn 586 24.1 4.1 19.9 Commercial 25.6 Sum of all green = $837Mn total “savings” 6.2 19.4 6.9 Medicare Part D <$35 536 233 142 0 6.9 2.1 Medicaid Cash/ Assistance 1.2 0.9 ≥$35 381 279 43 370 161 Commercial <$35 326 216 6 Medicare Part D ≥$35 capped Medicaid 338 0 6 Cash/ Assistance ≥$35 excess cost Source: IQVIA LAAD Sample Claims Data, Jan 2013–Dec 2019 • Total out-of-pocket costs paid by patients with insulin $326 million for cash-paying patients (typically the prescriptions amounted to $1.5 billion in 2019, and 82% uninsured). Per prescription savings would average of those costs are linked to the 24% of prescriptions $56 in commercial, $45 in Medicare, and $264 for cash. that cost patients more than $35. • Patients spent $532 million in commercial plans, $586 million in Medicare, and $381 million when paying cash for the respective 18.7 million, 20.2 million, and 2.1 million insulin prescriptions filled in 2019. • For just those prescriptions above $35 in cost, patients • These savings do not reflect potential changes in the costs of lower-cost prescriptions or additional volume due to better adherence related to lower costs. • Some lower-cost prescriptions are currently supported by manufacturer coupons, which would likely no longer be required. Notably, patients may not reach paid $374 million dollars in commercial plans, $495 their deductibles as quickly if these lower costs are million in Medicare, and $369 million with cash. counted, and some may fail to realize savings on an • If those costs were reduced to $35 for all of those annual basis as a result. patients, they would save $837 million: $232 million in commercial plans, $279 million in Medicare, and Exhibit notes: Values may not sum due to rounding. Prescriptions in retail pharmacies were adjusted to consistent 30-day prescription lengths for cost and volume comparison purposes. Final out-of-pocket cost reflects the final patient responsibility after insurance and the use of coupons or other assistance for cash or commercial patients. Savings calculated as out-of-pocket cost minus $35 per month for prescriptions costing above $35. Savings could be offset in future if lower-cost prescriptions have higher costs. 20 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines PATIENT COST SENSITIVITY Patients starting new therapy abandon prescriptions at pharmacies with increasing frequency as prescription costs rise Exhibit 17: 14-day Abandonment Share of New-to-Product Prescriptions by Final Out-of-Pocket Cost in 2019, All Payers, All Products 80% 70% 60% 56% 50% 60% 45% 40% 35% 30% 26% 20% 10% 6% 5% 9% 14% 19% 17% 9% l ta To $7 $1 5.0 24 0– .9 9 $1 2 $2 5.0 49 0– .9 9 $2 5 $4 0.0 99 0– .9 9 $5 00 .0 0+ $5 0 $7 .00 4. – 99 $4 0 $4 .00 9. – 99 $2 0 $2 .00 9. – 99 $3 0 $3 .00 9. – 99 $1 0 $1 .00 9. – 99 $9 1$0 .0 $0 .0 .9 0 9 0% Source: IQVIA LAAD Sample Claims Data, Dec 2019 • The number of prescriptions written and transmitted • Many traditional insurance plans with a fixed copay to pharmacies by doctors, either by traditional paper, design include brand copays of less than $30 for by phone or electronically, exceeds the number preferred products, with abandonment of 14% or less. patients actually fill for a variety of reasons. This can be compared to a non-preferred brand copay • Some patients choose not to fill a prescription if they don’t agree with the doctor’s advice or found it of $75 with an abandonment of 26% or higher. • Benefit designs that inherently expose patients to inconvenient to do so, but the more common reason is costs use this patient behavior relating to costs to the cost of the prescription. encourage the use of lower-cost medicines, but • Of prescriptions with a final cost above $500, 60% are not picked up by patients, as compared with 5% of can equally result in patients not taking necessary medicines. patients who do not fill even when there is zero cost. • The overall abandonment rate for all prescriptions across all pay types is 9%, primarily because over 90% of prescriptions are generic, and the costs are more typically less than $20 for those medicines. Exhibit notes: New to product prescriptions are those where patients have not had a prescription for the specific brand or generic drug within the prior year. Pharmacies in the sample provide information on prescriptions which were prepared for dispensing and whether they were dispensed, with abandonment defined as the prescription in question not being dispensed to the patient within 14 days of the initial fill. iqviainstitute.org 21 PATIENT COST SENSITIVITY Abandonment rates for the commercially insured are generally higher than Medicare with some variability by prescription cost Exhibit 18: 14-day Abandonment of New-to-Product Prescriptions By Pay Type and Final Out-of-pocket Cost in 2019, All Products 80% 70% 60% 50% 40% 30% 21% 20% 10% ta To $7 $1 5.0 24 0– .9 9 $1 2 $2 5.0 49 0– .9 9 $2 5 $4 0.0 99 0– .9 9 $5 00 .0 0+ $5 0 $7 .00 4. – 99 $4 0 $4 .00 9. – 99 $2 0 $2 .00 9. – 99 $3 0 $3 .00 9. – 99 $1 0 $1 .00 9. – 99 $9 1$0 .0 $0 .0 .9 0 9 0% 8% 6% l 9% Total Commercial Medicare Cash/Assistance Source: IQVIA LAAD Sample Claims Data, Jan–Dec 2019 • The impact of rising costs on abandonment rates has differing levels of impact depending on the type of insurance or cost-sharing model employed. • Medicare patients typically have the lowest abandonment, up to prescriptions costing $500. Though this insurance includes the standard Medicare benefit model with 25% coinsurance after a deductible up to a catastrophic coverage level with 5% coinsurance, it also includes low-income subsidies, Medicare Advantage and employer retiree coverage — all with lower copays. • Cash patients generally receive no support with their costs and have the highest abandonment up to $125, at which point the number of prescriptions they receive diminishes and the rate they abandon them also becomes less than other insurance types. • Although, across all pay types, abandonment occurs with 9% of prescriptions, cash patients abandon 21% of their prescriptions, while commercial insurance abandon 8%, and Medicare 6%. • Commercial insurance includes several benefit types, including the traditional fixed-copay model, which rarely includes costs above $70. Increasingly, plans have higher coinsurance tiers for specialty medicines, and most plans have some form of deductible, exposing patients to costs based on list prices for some of their prescriptions. • Commercially insured patients can legally use coupons to offset their costs, and do so for 16% of their brand prescriptions. However, they are not offered for all products, and many have eligibility rules that limit the amount of value per prescription or annually for a patient. • High deductible health plans (HDHP) offered by employers, along with health insurance exchanges (HIX), are based on exposure to list prices. Notably, these plans result in greater abandonment than other insurance types once costs reach $125 — presumably once patients could not use a coupon. Exhibit notes: New to product prescriptions are those where patients have not had a prescription for the specific brand or generic drug within the prior year. Pharmacies in the sample provide information on prescriptions which were prepared for dispensing and whether they were dispensed, with abandonment defined as the prescription in question not being dispensed to the patient within 14 days of the initial fill. 22 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines PATIENT COST SENSITIVITY Abandonment rates average 18% across three common therapeutic classes and slightly higher for people with incomes below $25k/year Exhibit 19: 14-day Abandonment of New-to-Product Branded Prescriptions for Diabetes, Anticoagulants, and Oral Oncology by Household Income and Prescription Cost, 2019 80% 70% 60% 50% 40% 30% 19.6 16.5 20% 10% Average <$25K Income ra ve O .0 00 $5 18 ll 68 0+ 60 $2 5 $4 0.0 99 0– .9 9 45 $1 2 $2 5.0 49 0– .9 9 33 $7 $1 5.0 24 0– .9 9 24 $4 0 $7 .00 4. – 99 14 $2 0 $3 .00 9. – 99 0 .0 $0 10 $0 $1 .01 9. – 99 7 0% ≥$100K Income Source: IQVIA LAAD Sample Claims Data, and Experian Patient-level Wealth Data, Jan–Dec 2019, limited to brands in the anticoagulant, diabetes, and oral oncology markets • Affordability of medicines inherently varies based • While these three therapeutic classes are clearly on the financial resources of a patient. However, it is medically necessary, and patients are likely motivated noteworthy that the abandonment rates for higher- to seek and take treatment, financial considerations income patients are only slightly lower than for the are much less a driver of behavior for individuals lowest income patients. than the general behavior all patients have to react to • Across three common therapeutic classes —diabetes, anticoagulants and oral oncology — abandonment higher cost medications. • Notably, patients of all income levels have relatively is often quite similar overall and does not vary similar abandonment of around 7% across these three substantially by income. therapeutic classes when prescriptions have no cost, • At 18.0%, abandonment across these three therapeutic classes is twice as high as the overall market, with low income patients abandoning 19.6% of new which is slightly higher than the 5% on the overall market (see Exhibit 17). • One important limitation of abandonment rates as a prescriptions and higher income patients abandoning proxy for the impact of costs on patients, is that they 16.5%. do not reflect patients who do not go to the doctor and thus do not first receive a prescription. Therefore, it is likely that further patients are not receiving the prescriptions they need. Exhibit notes: Household income data has been anonymized and then linked to patients’ anonymized prescription data, see Methodology for details. iqviainstitute.org 23 INSURANCE CHANGES SINCE COVID-19 Few commercially insured patients have lost coverage to date, and fewer than in 2019, but more could be at risk as COVID-19 continues Exhibit 20: Percentage of Patients that Changed from Commercial (non-HIX) Insurance to New Coverage and New Coverage Type 100% Percent of Commercially Insured Changing Coverage in Year 80% 60% 5.9% 5.7% 5.6% 6.2% 5.3% 6.0% New Coverage Type 4.2% 4.5% 11.8% 16.8% 16.3% 15.9% 4.3% 3.8% 4.5% 4.1% 54.6% 20% States with States without Medicaid expansion Medicaid expansion 2019 2020 17.3% 4.2% 3.3% 40% 59.2% All states 5.3% 3.8% 0% All states 66.1% States with States without Medicaid expansion Medicaid expansion Cash and discount card FFS Medicaid HIX Medicare Part D Managed Medicaid Other Source: IQVIA MAAS COVID-19 Coverage Change Tracker, June 12, 2020 • While coverage changes have been expected due • As states manage the budget impacts of COVID-19, and to the unprecedented increase in unemployment the eventual recovery, states that expanded Medicaid since March, the fullest impact of COVID-19-driven can expect a greater degree of Medicaid enrollment if unemployment has not yet been felt in changes to job losses continue for a sustained period. patients’ coverage. • Only 5.6% of commercially insured patients had a • Some employers have publicly indicated their intention to maintain coverage for several months. But should change in the way they paid for medicines to date — this come to an end, larger portions of those with less than the 5.9% in the same period in 2019. commercial insurance can be expected to shift to • Of those who have changed coverage, the most common change has affected use of cash discount cards, typically provided by an independent company, a pharmacy or a drug manufacturer. • This shift to use cash or discount cards is even more pronounced in states that did not expand Medicaid HIX or Medicaid, and some who choose to retire may switch to Medicare. • As cash payments typically have higher out-of-pocket costs, patient affordability will be challenged and their dependence on coupons and discount cards will be a critical element over the coming months. eligibility through the ACA, and conversely, those that did expand eligibility have seen 16.8% of the patients that changed coverage move into Medicaid. Exhibit notes: Pre-COVID-19 timeframe was 1/1/2020–3/15/2020 compared to 3/16/2020–6/12/2020 to identify changes in coverage. Only patients with at least one filled prescription in the pre- and post- periods were included. 24 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines POLICIES IMPACTING MEDICINE PRICING A number of recent Federal policies target patient affordability, particularly in diabetes Exhibit 21: Federal Policies Expected to Impact Affordability and Prices in 2020 and Beyond IRS rule Senior Savings Model International price index Allowing copay reductions in high deductible plans Med D 2021 Plan designs with a $35 monthly copay cap for insulins Price reductions in Medicare based on prices in other countries Rebate passthrough Lifesaving medicines Drug importation Rules governing PBM-received rebates aimed to reduce patient out-of-pocket costs Penny pricing for insulins and injectable epinephrine to be passed through from purchasing entities to patients, including uninsured and those facing affordability challenges Allowing drug reimportation from other countries where prices may be lower Source: IQVIA Institute, Jul 2020 • The changed IRS rule governing high-deductible plans with Health Savings Accounts (HDHP/HSA) expands the range of therapies that are considered preventive (adding diabetes and hypertension among others) and allows lower out-of-pocket costs during deductibles for beneficiaries of those plans in 2021 and beyond. • The new CMS Senior Savings Model announced in March 2020 would cap insulin copays at $35 per month supply for participating Medicare Part D plans in 2021. • In executive orders announced July 24th, the administration laid out policies with wide-ranging impacts on drug pricing, while the specific provisions and impacts of the policies remain unclear. • One order laid out an international price index that benchmarks U.S. prices to those in other developed markets, with implementation and details pending negotiation with drug makers. • The order eliminating the safe harbor for drug rebates requires that rebates be passed to consumers at the point-of-sale rather than being used at the discretion of pharmacy benefit managers (PBMs), but can only take effect if deemed not to increase Medicare premiums, the deficit, or patients’ total out-of-pocket costs. It therefore may be difficult to implement as prior versions of this proposal were deemed to have those effects. • Lifesaving medicines such as insulin and epinephrine are often purchased at ‘penny-pricing’ by federally qualified health centers (FQHC) through the 340b program, which would be required to offer patients access to these drugs at acquisition costs and open up eligibility to the uninsured and those patients facing an unaffordable deductible — potentially millions of Americans. • Drug reimportation programs to obtain drug from other countries via city, state, native-American tribe or individual actions, would enable access to lower cost medicines, though it remains unclear if there are sufficient supplies in source countries to satisfy demand. iqviainstitute.org 25 POLICIES IMPACTING MEDICINE PRICING Thirty-six states have passed or are actively advancing legislation on four areas relating to drug pricing Exhibit 22: State Policies Expected to Impact Affordability and Prices in 2020 and Beyond Financial Transparency 17 states enacted • Require advance notice and/or justification of price increases • Report information on development and manufacturing costs and prices Copay Caps 18 states enacted • Limits on monthly out-of-pocket costs • Limit patient cost obligation to retail price if less than plan defined-copay/coinsurance • Require PBMs to disclose manufacturer rebates Insulin Copay Caps Anti-Price Gouging 10 states enacted (11 progressing) • Limits on monthly insulin copays with states ranging from $25 to $100 per month • All enacted policies except in Minnesota cover commercial plans regulated by states, some go beyond • Minnesota covers uninsured and underinsured at max $50 for 90 day supply 2 states passed (10 progressing) • Legislation providing jurisdiction for states to sue manufacturers for “unconscionable” price increases, ones that are not justified by the costs of making or distributing the drug Source: IQVIA Institute, Jul 2020 • Federal drug pricing reforms in the past two years have broadly focused on rule changes to Medicare via executive authority, which are possible without new legislation. However, the most high-profile proposals from early 2019 have largely failed to be finalized, and states have been pursuing policies independently. • Since 2015, 36 states have either enacted, or are actively advancing, legislation to address one or more of four key pricing policy areas: transparency, copay caps — both generally and for insulins specifically — and anti price-gouging policies to prevent sharp increases. • New York has enacted policies in all four categories while Colorado, Illinois, Louisiana, Maryland, Maine, New Jersey, Vermont, Washington, and West Virginia have each enacted or are currently advancing policies in three of the areas. • Regardless of the characteristics of the various state policies, it is unclear if any of them could have a material impact on prices because existing state and federal regulations limit the powers of states. • Additionally, transparency and anti-price gouging laws are often narrowly focused on generics or essential medicines that have the most obvious excess price levels or increases. • Furthermore, narrowly-focused regulations affecting one type of drug or therapy area do not account for plan designs with deductibles that manage patient cost exposure for the entire year. As a result, some patients may see no impact of the policies, while others not directly impacted by the regulations may see their premiums rise. • A September 2019 Gallup Poll revealed that more than 20% of patients reported not having enough money to pay for needed medicine — more than double the 9% overall average abandonment rate — and this suggests that lack of affordability may be driving underlying cost pressures and may not be solely related to high-cost medicines. Exhibit notes: Gallup-West Health National Healthcare Study, Sept 16-30, 2019, N=1,099. 26 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines Appendix Exhibit 23: Top Therapeutic Classes by Descriptions DISPENSED PRESCRIPTIONS MN 2017 2018 2019 Total U.S. Market 4,237 4,213 4,218 1 Antihypertensives 680 674 663 2 Mental health 381 387 395 3 Pain 424 400 388 4 Nervous system disorders 371 367 365 5 Antibacterials 258 247 248 6 Lipid regulators 250 249 246 7 Antidiabetics 214 214 216 8 Respiratory agents 170 172 176 9 Anti-ulcerants 163 160 159 10 Thyroid preparations 130 128 126 11 Dermatologics 101 105 110 12 ADHD 90 91 94 13 Anticoagulants 79 80 80 14 Hormonal contraception 86 81 77 15 Corticosteroids 72 72 76 16 Vitamins & minerals 72 70 69 17 GI products 61 63 57 18 Vaccines 34 46 54 19 Other cardiovasculars 45 45 46 20 Benign prostatic hypertrophy 43 44 45 Source: IQVIA National Prescription Audit, Jul 2020 Notes: Therapeutic classes are based on proprietary IQVIA definitions. Includes prescription-bound products including insulins dispensed through chain and independent pharmacies, food store pharmacies, mail service pharmacies, and long-term care facilities. Excludes OTC products. IQVIA routinely updates its national audits, which may result in changes to previously reported market size and growth rates. Prescriptions are not adjusted for length of therapy; 90-day and 30-day prescriptions are both counted as one prescription. iqviainstitute.org 27 APPENDIX Exhibit 24: Top Therapeutic Classes by Non-Discounted Spending NON-DISCOUNTED SPENDING US$BN 2015 2016 2017 2018 2019 Total U.S. Market 426.7 446.4 455.0 483.8 511.4 1 Oncologics 39.1 45.1 50.2 58.5 67.5 2 Antidiabetics 43.6 49.7 54.2 60.7 66.7 3 Immunology 31.2 38.9 46.6 55.1 66.3 4 Respiratory agents 23.7 25.6 27.0 29.3 29.7 5 HIV antivirals 16.1 18.7 20.6 22.6 24.4 6 Anticoagulants 9.9 12.1 14.2 17.1 20.5 7 CNS & others 16.8 18.9 20.5 22.2 20.1 8 Multiple sclerosis 17.5 17.7 18.8 18.8 18.7 9 Mental health 19.7 17.0 15.9 16.6 16.9 10 Pain 20.3 19.7 17.4 16.2 16.0 11 Vaccines (pure, comb, other) 10.2 10.6 10.5 11.8 13.8 12 Other cardiovasculars 7.4 8.3 9.4 10.7 10.1 13 ADHD 11.2 11.0 9.9 9.3 8.9 14 GI products 7.1 8.0 8.4 8.7 8.8 15 Dermatologics 10.7 11.1 9.5 8.7 7.8 16 Antihypertensives, plain & combo 10.3 9.5 7.5 7.1 7.8 17 Viral hepatitis 18.8 14.9 10.8 7.5 6.1 18 Ophthalmology, general 4.9 5.0 5.4 5.4 5.7 19 Hormonal contraception, systemic and topical 5.4 5.4 5.6 5.5 5.5 20 Sex hormones (androgens, oestrogens, progestogens) 6.4 6.4 6.3 6.2 5.4 Source: IQVIA National Sales Perspectives, Jul 2020 Notes: Therapeutic classes are based on proprietary IQVIA definitions. Includes prescription and insulin products sold into chain and independent pharmacies, food store pharmacies, mail service pharmacies, long-term care facilities, hospitals, clinics, and other institutional settings. Excludes OTC. IQVIA routinely updates its national audits, which may result in changes to previously reported market size and growth rates. 28 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines APPENDIX Exhibit 25: Top Medicines by Prescription DISPENSED PRESCRIPTIONS MN 2017 2018 2019 Total U.S. Market 4,237 4,213 4,218 1 atorvastatin 109 114 118 2 levothyroxine 117 115 113 3 lisinopril 101 98 96 4 amlodipine 85 87 89 5 metoprolol 86 87 85 6 metformin 83 81 80 7 gabapentin 65 67 69 8 albuterol 65 66 67 9 omeprazole 69 66 64 10 acetaminophen/hydrocodone 79 68 61 11 losartan 49 54 57 12 amoxicillin 56 55 55 13 sertraline 48 49 51 14 prednisone 44 44 47 15 hydrochlorothiazide 46 45 46 16 fluticasone 43 44 45 17 furosemide 44 43 42 18 ibuprofen 41 42 42 19 pantoprazole 37 39 41 20 montelukast 38 40 41 Source: IQVIA National Prescription Audit, Jul 2020 Notes: Includes prescriptions and insulins dispensed through chain and independent pharmacies, food store pharmacies, mail service pharmacies, and longterm care facilities. Excludes OTC. IQVIA routinely updates its national audits, which may result in changes to previously reported market size and growth rates. Prescriptions are not adjusted for length of therapy; 90-day and 30-day prescriptions are both counted as one prescription. Table shows leading activeingredients or fixed combinations of ingredients and includes both branded and generic products. iqviainstitute.org 29 APPENDIX Exhibit 26: Top Medicines by Non-Discounted Spending NON-DISCOUNTED SPENDING US$BN 2015 2016 2017 2018 2019 Total U.S. Market 426.7 446.4 455.0 483.8 511.4 1 Humira 10.1 13.5 16.3 18.4 21.4 2 Eliquis 1.6 3.0 4.6 7.1 9.9 3 Enbrel 7.2 7.6 7.9 8.0 8.1 4 Stelara 2.0 2.6 3.7 5.0 6.6 5 Keytruda 0.4 0.7 2.2 4.3 6.5 6 Trulicity 0.3 1.2 2.7 4.5 6.5 7 Januvia 4.1 4.7 5.0 5.7 6.0 8 Xarelto 2.8 3.5 4.3 5.2 6.0 9 Biktarvy – – – 1.3 5.1 10 Remicade 5.0 5.3 5.5 5.3 4.7 11 Opdivo 0.8 2.7 3.1 4.2 4.4 12 Rituxan 3.7 3.9 4.0 4.3 4.3 13 Lantus Solostar 5.8 5.5 4.8 4.3 4.3 14 Symbicort 2.7 3.0 3.1 3.5 3.9 15 Jardiance 0.3 0.6 1.4 2.2 3.9 16 Genvoya 0.0 1.6 3.6 4.5 3.8 17 Tecfidera 3.5 3.4 3.6 3.5 3.8 18 Vyvanse 2.6 3.0 3.3 3.6 3.7 19 Victoza 3-Pak 2.0 2.4 2.9 3.5 3.6 20 Ibrance 0.7 2.1 2.9 3.2 3.6 Source: IQVIA National Sales Perspectives, Jul 2020 Notes: Spending is based on IQVIA National Sales Perspectives and is not adjusted for estimates of off-invoice discounts and rebates. Includes prescription and insulin products sold into chain and independent pharmacies, food store pharmacies, mail service pharmacies, long-term care facilities, hospitals, clinics, and other institutional settings. Excludes OTC. IQVIA routinely updates its national audits, which may result in changes to previously reported market size and growth rates. Copaxone includes both 20mg and 40mg strengths. 30 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines APPENDIX Exhibit 27: Dispensing Location by Non-Discounted Spending NON-DISCOUNTED SPENDING US$BN 2015 2016 2017 2018 2019 Total U.S. Market 426.7 446.4 455.0 483.8 511.4 306.7 322.0 322.9 337.6 354.4 Chain stores 131.1 138.4 135.4 140.0 144.1 Mail service 98.6 105.8 111.6 121.4 132.5 Independent 48.2 49.8 49.6 50.2 50.3 Food stores 28.9 28.0 26.3 25.9 27.5 118.8 123.2 130.8 145.0 155.6 Clinics 57.2 64.1 71.3 81.2 91.0 Non-federal hospitals 33.5 34.3 34.2 36.6 37.2 Long-term care 16.6 16.5 16.6 16.7 15.8 HMO 4.9 1.7 1.9 2.0 2.2 Home health care 3.9 3.8 4.2 5.7 6.6 Federal facilities 2.7 2.8 2.7 2.8 2.9 1.2 1.3 1.4 1.3 1.3 Retail and mail Non-retail Miscellaneous Source: IQVIA National Sales Perspectives, Jul 2020 Notes: Spending is based on IQVIA National Sales Perspectives and is not adjusted for estimates of off-invoice discounts and rebates. Includes prescriptionbound products including insulin products and excluding other products such as OTC. IQVIA routinely updates its national audits, which may result in changes to previously reported market size and growth rates. iqviainstitute.org 31 APPENDIX Exhibit 28: Prescriptions by Location Unadjusted Prescription Length DISPENSED PRESCRIPTIONS MN 2017 2018 2019 4,236.7 4,213.3 4,217.8 3,848.1 3,818.1 3,813.4 Chain stores 2,397.2 2,370.3 2,340.3 Mail service 211.6 213.7 205.6 Independent 706.8 702.8 705.9 Food stores 532.5 531.4 561.6 388.6 395.1 404.5 388.6 395.1 404.5 2017 2018 2019 6,023.3 6,201.9 6,414.3 5,470.8 5,620.3 5,800.1 Chain stores 3,408.1 3,489.1 3,559.5 Mail service 300.8 314.6 312.7 Independent 1,004.8 1,034.5 1,073.7 Food stores 757.0 782.2 854.2 552.5 581.6 615.2 552.5 581.6 615.2 Total U.S. Market Retail and mail Non-retail Long-term care Source: IQVIA National Prescription Audit, IQVIA Institute, Jul 2020 Exhibit 29: Prescriptions by Location Adjusted for Prescription Length DISPENSED PRESCRIPTIONS MN Total U.S. Market Retail and mail Non-retail Long-term care Source: IQVIA National Prescription Audit, National Sales Perspectives, Jul 2020 Notes: Prescription counts are adjusted for length of prescriptions and re-aggregated. Prescriptions referred to as 90-day are calculated based on transactions with 84 days supply or more to include medicines with up to one week fewer treatment days. Prescriptions for 84 days supply or more or factored by three, and those under 84 days unchanged. 32 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines APPENDIX Exhibit 30: Dispensing by Payment Type for Retail Prescriptions DISPENSED PRESCRIPTIONS MN 2017 2018 2019 3,848.1 3,818.1 3,813.4 Commercial third party 50.8% 50.9% 51.6% Medicare Part D 27.5% 27.6% 27.4% Medicaid 16.4% 16.4% 16.1% Cash 5.4% 5.1% 4.9% Retail prescriptions Source: IQVIA National Prescription Audit, US SMART, Managed Care, Apr 2020 Notes: Report reflects prescription-bound products including insulins and excluding other products such as OTC. Medicaid includes both Fee for Service and Managed Medicaid. Exhibit 31: Non-Discounted Spending and Dispensing by Product Type NON-DISCOUNTED SPENDING US$BN 2015 2016 2017 2018 2019 Total U.S. Market 426.7 446.4 455.0 483.8 511.4 Branded 73.7% 74.6% 76.7% 78.6% 80.0% Unbranded generic 16.2% 15.1% 13.2% 11.7% 11.2% Branded generic 10.2% 10.3% 10.1% 9.7% 8.8% 2017 2018 2019 4,236.7 4,213.3 4,217.8 Branded 10.0% 10.1% 9.8% Unbranded generic 85.2% 85.4% 86.2% 4.7% 4.4% 3.8% DISPENSED PRESCRIPTIONS MN Total U.S. Market Branded generic Source: IQVIA National Prescription Audit, National Sales Perspectives, Jul 2020 Notes: Includes prescriptions and insulins dispensed by chain and independent pharmacies, food store pharmacies, mail service pharmacies, and long-term care facilities. Spending figures also include sales into hospitals, clinics, and other institutional settings. IQVIA routinely updates its national audits, which may result in changes to previously reported market size and growth rates iqviainstitute.org 33 Notes on sources THIS REPORT IS BASED ON THE IQVIA SERVICES IQVIA’S LONGITUDINAL PRESCRIPTION DATA DETAILED BELOW IQVIA receives nearly four billion prescription claims per The trends presented reflect U.S. activities only. NATIONAL SALES PERSPECTIVES (NSP)™ measures revenue within the U.S. pharmaceutical market by pharmacies, clinics, hospitals, and other healthcare providers. NSP reports 100% coverage of the retail and non-retail channels for national pharmaceutical sales at actual transaction prices. The prices do not reflect off-invoice price concessions that reduce the net amount received by manufacturers. year with history from January 2006, and covers over 90% of the retail channel, 60–85% of mail service, and 75– 80% of long-term care. Longitudinal data derives from electronic data received from pharmacies, payers, software providers and transactional clearinghouses. This information represents activities that take place during the prescription transaction and contains information regarding the product, provider, payer, and geography. Rx data is longitudinally linked back to an anonymous patient token and is linkable to events within the data set itself and across other patient data assets. IQVIA’S NATIONAL PRESCRIPTION AUDIT (NPA NPA is the industry standard source of national prescription activity for all pharmaceutical products. It measures demand for prescription drugs, including dispensed pharmaceuticals to consumers across three unique channels: retail, mail service, and long-term care pharmacies. From sample pharmacies, IQVIA collects new and refilled prescription data daily. NPA represents and captures over 92% of all outpatient prescription activity in the United States and covers all products, classes, and manufacturers. IQVIA’S NATIONAL PRESCRIPTION AUDIT: NEW TO BRAND (NPA NTB) NPA New to Brand provides enhanced visibility into the volume of a patient’s true, first-time use of a brand versus continued therapies. IQVIA’s longitudinal data allows users to analyze new therapy starts, switched to/add-on products, as well as continued therapies. In addition to reporting the new or refill information from a prescription, the therapy history for the patient is taken into account in order to categorize that prescription. New to Brand Rx (NBRx) = New Therapy Start Rx + Switch/Add-On Rx. Definitions Cost exposure is the price a patient faces when presenting a prescription to be filled, prior to the application of benefit design or coupons which can contribute to lower final out-of-pocket costs. Final out-of-pocket costs are the observed patient costs for their prescriptions after applying benefit design rules at the point of sale and applying coupons presented by the patient, and are normalized to 30-day prescription lengths. Gross sales are defined as sales volumes reported at wholesaler acquisition cost (WAC). Invoice sales are defined as sales volumes reported at the invoice prices between wholesalers and their customers as reported in IQVIA National Sales Perspectives. Manufacturer Net Revenues are defined as the net amount of revenue received by a manufacturer after deducting off-invoice discounts, rebates or coupons paid to other market participants including payers, pharmacies, wholesalers or patients. 34 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines Methodology HOUSEHOLD INCOME values by volumes for the same products reported to Household income along with other metrics are IQVIA. Estimated brand net price growth for the total sourced from Experian, a credit reporting agency, which market is projected from the analysis sample to the total anonymizes individuals’ data using an IQVIA proprietary market. Net prices represent an estimate of the average token methodology that then allows IQVIA’s anonymous manufacturer realized price, reflecting any reductions patient prescription claim records to be linked to in net revenues due to off-invoice discounts, rebates, household income data. copay assistance or other price concessions, and do DIAGNOSIS ELIGIBILITY FOR AFFORDABILITY ANALYSES Eligibility is granted on a year-by-year basis so patients can fall in and out of cohorts based on their activity and prescription history. Patients must have at least two diagnoses of interest during the five year study period to be considered for inclusion, and at least one related prescription per year to be included in each yearly cohort. DISPENSED PRESCRIPTIONS ADJUSTED FOR 90-DAY PRESCRIPTIONS (METHOD USED IN APPENDIX TABLES) Prescriptions with >84 days supply to the patient are assumed to represent a three-month prescription, and all other prescriptions are assumed to represent a one-month prescription. Three-month prescriptions are factored by three to normalize prescriptions to one-month durations. not necessarily reflect the net costs paid by insurers, the federal government, or patients, which all vary significantly and independently. For generic companies, a sample of five large generic companies’ generic portfolios were analyzed in aggregate consistent with their SEC filings, as specific generic product analyses are not possible. See Medicine Use and Spending in the United States, April 2019 for more details. The IQVIA “net sales adjustment” analysis is based on ex-manufacturer invoice sale prices, which are lower than wholesaler acquisition cost (WAC). In Diabetes, invoice is 48–49% below WAC, and net manufacturer revenues in diabetes are 67% lower for protected brands, 30% for generics, and 51% overall. In the market overall, invoice prices are 24% below WAC, with net prices 63% below that list price (see Exhibit 32). ESTIMATES OF NET MANUFACTURER REVENUE AND PRICES IQVIA audits reflect invoice-based pricing derived from Exhibit 32: WAC, Invoice and Net Prices, 2019 proprietary information gathered from wholesalers and company direct sales. While IQVIA invoice prices reflect supply-chain price concessions, they do not reflect the off-invoice discounts and rebates separately paid to insurers, or other price concessions paid to patients or other health system participants. Estimated net prices and revenue are projected from a sample of large 100% 100% 100% 87% 76% and mid-sized companies analyzed from 2011–2019. Branded products are included in the sample if their 52% 37% net sales amount is disclosed in financial filings with the 36% Securities and Exchange Commission (SEC) and if the volume of sales captured in IQVIA audits is consistent with information provided directly by manufacturers in support of IQVIA proprietary datasets. Net prices 29% Total Generics WAC Invoice Protected brands Net are calculated by dividing publicly reported net sales iqviainstitute.org 35 About the authors MURRAY AITKEN MICHAEL KLEINROCK Executive Director, Research Director, IQVIA Institute for Human IQVIA Institute for Human Data Science Data Science Murray Aitken is Executive Director, IQVIA Institute Michael Kleinrock serves as research director for for Human Data Science, which provides policy setters the IQVIA Institute for Human Data Science, setting and decisionmakers in the global health sector with the research agenda for the Institute, leading the objective insights into healthcare dynamics. He led development of reports and projects focused on the the IMS Institute for Healthcare Informatics, now the current and future role of human data science in IQVIA Institute, since its inception in January 2011. healthcare in the United States and globally. Kleinrock Murray previously was Senior Vice President, Healthcare leads the research development included in Institute Insight, leading IMS Health’s thought leadership reports published throughout the year. The research is initiatives worldwide. Before that, he served as Senior focused on advancing the understanding of healthcare Vice President, Corporate Strategy, from 2004 to 2007. and the complex systems and markets around the world Murray joined IMS Health in 2001 with responsibility that deliver it. Throughout his tenure at IMS Health, for developing the company’s consulting and services which began in 1999, he has held roles in customer businesses. Prior to IMS Health, Murray had a 14-year service, marketing, product management, and in 2006 career with McKinsey & Company, where he was a leader joined the Market Insights team, which is now the IQVIA in the Pharmaceutical and Medical Products practice Institute for Human Data Science. He holds a B.A. degree from 1997 to 2001. Murray writes and speaks regularly in History and Political Science from the University of on the challenges facing the healthcare industry. He is Essex, Colchester, UK, and an M.A. in Journalism and editor of Health IQ, a publication focused on the value Radio Production from Goldsmiths College, University of of information in advancing evidence-based healthcare, London, UK. and also serves on the editorial advisory board of Pharmaceutical Executive. Murray holds a Master of Commerce degree from the University of Auckland in New Zealand, and received an M.B.A. degree with distinction from Harvard University. 36 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines GINA CAMPANELLI CLAUDIA TAWIL Associate Consultant, Associate Consultant, U.S. Market Access Strategy U.S. Market Access Strategy Consulting, IQVIA Consulting, IQVIA Gina Campanelli is an Associate Consultant with the U.S. Claudia Tawil serves as an Associate Consultant for Market Access Strategy Consulting division of IQVIA, the U.S. Market Access Strategy Consulting division driving analytical capabilities and strategic insights on of IQVIA, leading analytics for an array of client client engagements. Using her expertise in longitudinal engagements around patient access to pharmaceuticals. claims data and patient analytics, Gina has investigated She has conducted in-depth assessments of patient health policy changes in both Medicare Parts B and savings programs, including commercial copay card D with a focus on patient access and manufacturer optimizations, voucher and denial conversion program margin. She has extensive experience in analyzing and evaluations, and copay accumulator and maximizer optimizing patient savings programs that bridge patient impact assessments. Prior to her time at IQVIA, Claudia access with affordability. Prior to her time at IQVIA, interacted with various stakeholders in the healthcare Gina worked in clinical research and patient care in the sector and pharmaceutical supply chain through health rheumatology space. Gina holds a B.A. in Art History policy research, ranging from the global impact of from Dartmouth College. intellectual property law on pharmaceutical trade to the domestic impact of opioid dependence and abuse. Claudia holds a Bachelor of Science in Global Health from MARCELLA VOKEY Georgetown University. Associate Director of Thought Leadership, U.S. Market Access Strategy Consulting, IQVIA Marcella Vokey leads thought leadership initiatives for IQVIA’s U.S. Market Access Strategy Consulting team with a focus on trends and strategy for biopharmaceutical manufacturers. Marcella joined IQVIA in 2013 as a consultant, developing evidence-based insights for payer contracting, salesforce, and patient assistance strategy. She has more than nine years of experience in patient longitudinal data, payer managed markets, health policy and stakeholder incentives. Marcella holds a B.S. in Political Science from the Massachusetts Institute of Technology. iqviainstitute.org 37 About the Institute The IQVIA Institute for Human Data Science • Understanding the future role for biopharmaceuticals contributes to the advancement of human health in human health, market dynamics, and implications globally through timely research, insightful analysis and for manufacturers, public and private payers, scientific expertise applied to granular non-identified providers, patients, pharmacists and distributors. patient-level data. • Researching the role of technology in health system Fulfilling an essential need within healthcare, the products, processes and delivery systems and the Institute delivers objective, relevant insights and business and policy systems that drive innovation. research that accelerate understanding and innovation critical to sound decision making and improved human outcomes. With access to IQVIA’s institutional knowledge, advanced analytics, technology and Guiding Principles The Institute operates from a set of guiding principles: • Healthcare solutions of the future require fact based unparalleled data the Institute works in tandem with a scientific evidence, expert analysis of information, broad set of healthcare stakeholders to drive a research technology, ingenuity and a focus on individuals. agenda focused on Human Data Science including government agencies, academic institutions, the life sciences industry and payers. Research Agenda The research agenda for the Institute centers on 5 areas considered vital to contributing to the advancement of human health globally: • Improving decision-making across health systems through the effective use of advanced analytics and methodologies applied to timely, relevant data. • Addressing opportunities to improve clinical development productivity focused on innovative treatments that advance healthcare globally. • Optimizing the performance of health systems by focusing on patient centricity, precision medicine • Rigorous analysis must be applied to vast amounts of timely, high quality and relevant data to provide value and move healthcare forward. • Collaboration across all stakeholders in the public and private sectors is critical to advancing healthcare solutions. • Insights gained from information and analysis should be made widely available to healthcare stakeholders. • Protecting individual privacy is essential, so research will be based on the use of non-identified patient information and provider information will be aggregated. • Information will be used responsibly to advance research, inform discourse, achieve better healthcare and improve the health of all people. and better understanding disease causes, treatment consequences and measures to improve quality and cost of healthcare delivered to patients. 38 Medicine Spending and Affordability in the United States: Understanding Patients’ Costs for Medicines The IQVIA Institute for Human Data Science is committed to using human data science to provide timely, fact-based perspectives on the dynamics of health systems and human health around the world. The cover artwork is a visual representation of this mission. Using algorithms and data from the report itself, the final image presents a new perspective on the complexity, beauty and mathematics of human data science and the insights within the pages. The artwork on this report cover in based on data pertaining to patient cost exposure, payer payments, and patient final out-of-pocket costs for retail prescription drugs in the U.S. from 2014-2019. The data detailed insurance type and whether products were brands or generics. CONTACT US 100 IMS Drive Parsippany, NJ 07054 United States info@iqviainstitute.org iqviainstitute.org Copyright © 2020 IQVIA. All rights reserved. 08.2020.ENT