Medicare Part D Payments for Topical Steroids: Rising Costs and Potential Savings

Abstract

Importance: Rising pharmaceutical costs in the United States are an increasing source of financial burden for payers and patients. Although topical steroids are among the most commonly prescribed medications in dermatology, there are limited data on steroid-related spending and utilization.

Objective: To characterize Medicare and patient out-of-pocket costs for topical steroids, and to model potential savings that could result from substitution of the cheapest topical steroid from the corresponding potency class.

Design, setting, and participants: This study was a retrospective cost analysis of the Medicare Part D Prescriber Public Use File, which details annual drug utilization and spending on both generic and branded drugs from 2011 to 2015 by Medicare Part D participants who filled prescriptions for topical steroids.

Main outcomes and measures: Total and potential Medicare and out-of-pocket patient spending. Costs were adjusted for inflation and reported in 2015 dollars.

Results: Medicare Part D expenditures on topical steroids between 2011 and 2015 were $2.3 billion. Patients' out-of-pocket spending for topical steroids over the same period was $333.7 million. The total annual spending increased from $237.6 million to $775.9 million, an increase of 226.5%. Patients' annual out-of-pocket spending increased from $41.4 million to $101.8 million, an increase of 145.9%. The total number of prescriptions were 7.7 million in 2011 and 10.6 million in 2015, an increase of 37.0%. Generic medication costs accounted for 97.8% of the total spending during this time period. The potential health care savings and out-of-pocket patient savings from substitution of the cheapest topical steroid within the corresponding potency class were $944.8 million and $66.6 million, respectively.

Conclusions and relevance: Most topical steroids prescribed were generic drugs. There has been a sharp increase in Medicare and out-of-pocket spending on topical steroids that is driven by higher costs for generics. Use of clinical decision support tools to enable substitution of the most affordable generic topical steroid from the corresponding potency class may reduce drug expenditures.

Figure 1.. Total Medicare Part D Spending on Topical Steroids by Potency Class, 2011 to 2015

Each bar represents total Medicare spending, and the orange line graph represents the proportion that is out-of-pocket costs for patients.

Figure 2.. Total Medicare Part D Spending on Brand and Generic Topical Steroids, 2011 to 2015

The blue portion represents total Medicare spending on generics, and the gray portion represents total Medicare spending on brand-name agents.

Figure 3.. Total Medicare Part D Potential Cost Savings by Potency Class, 2011 to 2015

Each bar represents potential Medicare savings, and the orange line graph represents the proportion that could be out-of-pocket savings for patients.