Concentration of spending and share of specialty drug spending in Medicare Part D over a 10-year period.

backgroundIn 2021, Medicare Part D gross prescription drug spending amounted to $216 billion, a number that has more than doubled over the last 10 years. Spending in Medicare Part D is concentrated on a small number of drugs, and spending on specialty drugs has increased in recent years. However, the extent to which concentration in Part D spending has changed over time and the drivers of this change have not been described.

objectiveTo quantify the time trends in Medicare Part D spending and utilization, the concentration of spending, and the share of spending accounted for by specialty drugs from 2012 to 2021.

methodsIn this repeated cross-sectional study, we used data from the Centers for Medicare & Medicaid Services Part D Drug Spending Dashboard to investigate the time trends in total gross spending, prescriptions claims, and the average cost of a prescription claim for Part D drugs. We assessed the concentration based on the share of total gross spending and prescriptions by the drugs with the top 1%, 5%, and 10% of the highest spending and Lorenz curves and Gini coefficients. In addition, we stratified our analyses by specialty and nonspecialty drugs.

resultsOver the last 10 years, total gross drug spending in Medicare Part D increased by 103.5%, with a compounded annual growth rate of 8.2%. This change was driven by both increases in prescription claims and price increases of existing drugs to a similar degree. The concentration of spending intensified, with the top 1% of drugs accounting for an escalating share of total spending (from 31.4% to 41.1%). Over the 10-year study period, these top-spending drugs accounted for 5.6% of prescriptions but 34.6% of spending. Lorenz curves and increased Gini coefficients similarly showed that a smaller number of drugs accounted for increased spending over the study period. Specialty drug spending increased by 566.5%, with a compounded annual growth rate of 23.5%. The share of total spending on specialty drugs increased from 21.7% in 2012 to 71.1% in 2021. In 2021, specialty drugs accounted for 6.2% of prescriptions but 71.1% of total spending.

conclusionsMedicare Part D gross drug spending became increasingly more concentrated from 2012 to 2021, which was especially pronounced for specialty drugs. Increases in prices for specialty and other brand-name drugs will likely continue to drive gross spending upward. Although the Inflation Reduction Act provisions will likely reduce net spending on selected drugs, other policy changes may be warranted.