Medicare spent $143 billion on drugs last year -- a sum that pushed drug spending up from 10 percent of the total budget in 2010 to 14 percent last year. On Monday, federal health officials released a database that details federal spending on 80 key medications that made up about a third of the total drug expenditures last year. They were selected because they were either the top bills paid by Medicare, the highest per-patient cost, or because they had the biggest price hikes between 2013 and 2014. (Note: the data doesn't reflect rebates and discounts negotiated between Medicare and the drug companies.)
Here are three simple takeaways from this data dump:
1) The new $84,000 hepatitis C drug hit Medicare hard -- but so did price increases
The Sovaldi effect dramatically demonstrates why tracking overall spending is crucial.
The hepatitis C drug, which was the subject of a recent Senate investigation for its $84,000 price tag, was the largest single contributor to Medicare drug expenses in 2014, costing $3.1 billion. More recently, The Washington Post has reported that Medicare spending on hepatitis C drugs for the first half of this year reached nearly $4.6 billion.
Charting Sovaldi with the other largest drivers of Medicare spending, the report revealed just how dramatic a change Sovaldi represents in total Medicare spending, with an especially steep line showing the increase in Medicare expenditures. But the other drugs that swallow a large swath of the drug spending budget also showed price increases, and although these were more modest than some that have grabbed headlines in recent months, they had a big impact on federal spending.
The number of people using Nexium, an acid reflux medication, actually decreased somewhat over the five years, but the price per unit went up 40 percent over the time period -- leading to about $800 million more in spending for Medicare.
This chart, showing the five largest drivers of Medicare Part D prescription drug spending, demonstrates why paying attention to the biggest sources of spending is crucial.
2) Drugs with the biggest price hikes aren't always the biggest line items
If health officials trying to get prescription drug spending under control simply looked for the drugs that are driving overall spending, they'd miss the ones that have some of the biggest increases. Two of the biggest price hikes in drugs covered by Medicare part B and Medicare part D occurred for drugs that, unlike Sovaldi, do not represent a huge chunk of overall federal spending. To figure out which drugs these are, it's important to look at the price per unit. (A "unit" varies depending on how a drug is dosed. It could be a tablet, a particular volume of fluid or a certain amount of ointment.)
For example, Cyanocobalamin, a vitamin B-12 injection, went up from 94 cents for a typical injection in 2010 to $4.51 in 2014. But it accounted for less than $5 million of total Medicare drug spending.
Vimovo, an arthritis pain relief pill paired with another drug to decrease stomach problems, increased from less than $2 to more than $12 per unit over a five-year time period. But even as its price skyrocketed and its use increased, Vimovo accounted for less than $40 million in Medicare spending.
3) The most expensive drugs for Medicare aren't necessarily the most expensive for patients
There's sometimes a disconnect between the drugs that are driving overall health spending and the ones that are sending patients home with staggering bills.
Drug spending can be seen in two ways: the amount Medicare pays for the drug and the amount that people pay. And those drugs that take the biggest toll may not always be the same. One of the biggest outlays for the Medicare program overall was the antipsychotic drug, Abilify, which cost Medicare more than $2.5 billion in 2014. The annual spending on the drug added up to more than $6,000 a year per beneficiary, but the average portion borne by the patient was $552 a year. The vast majority of the people taking the drug, who were on a low-income subsidy, would pay even less: $20 a year.
That means it's also important to examine the biggest drugs as measured by how much patients paid. For Medicare Part D, that included Sovaldi, but also included drugs that cost Medicare as a whole far less.
All this data shows just how many ways there are to measure the burden of prescription drug spending: There's the toll it takes on the overall system, the toll it takes on the patient and the raw price tag for a bottle of medication or an injection. Sometimes, these facets of a drug's price overlap and the drivers of one kind of spending are the same as another. But other times, they highlight a different set of drugs entirely, suggesting that coming up with a strategy to rein in spending will need to take into account all the ways in which high prices can matter.
This story has been updated.