Harvoni, Lantus top Medicare, Medicaid drug spend as U.S. total hits $457B

The Centers for Medicare & Medicaid Services released new data on Monday about 2015 drug spending. Pictured is the HHS from above.

At a time of intense scrutiny on the drug industry’s pricing practices, new Medicare and Medicaid spending numbers shed light on price hikes and their role in soaring U.S. drug costs that last year reached $457 billion.

The bulk of Medicare and Medicaid drug spend goes toward drugs targeted at big patient populations, some of them quite costly, others not so much. But price increases, albeit much smaller, played a role for some of those meds, too.

Medicare reports that 11 drugs more than doubled in price compared with 2014, while Medicaid saw 20 covered drugs more than double in per-unit cost. Valeant’s anxiety med Ativan posted the largest price increase in 2015, growing 1,264% over the previous year, according to a Centers for Medicare & Medicaid Services (CMS) dashboard that analyzes drug spending. Turing’s now-notorious Daraprim followed with an 874% average per-unit price hike.

As for the biggest drugs, spending-wise, Gilead’s megablockbuster hep C med Harvoni topped total 2015 spending for both Medicare and Medicaid. The agencies shelled out a bit more than $7 billion and $2.2 billion, respectively, for the pricey drug last year. Sanofi's basal insulin Lantus, often among the industry's goliath meds, came in second for Medicare, third for Medicaid, with double-digit price increases in both programs, as most of the top-spending drugs did.

Shedding light on rebates

Notably, CMS has for the first time released rebate information for Medicare Part D, with numbers dating to 2014. The agency disclosed that on $93 billion of branded drug spending, it received $16.2 billion in rebates, or 17.5%.

Top officials at the agency wrote Monday that the Medicare Part D rebates “are generally lower compared to other payors.” That’s partly because, as CMS Acting Director Andy Slavitt and others note, “Medicare cannot harness its full purchasing power to negotiate for rebates across all Part D plans.”

“We believe releasing this information, even at this higher level, helps to shed new light on the relationship between drug pricing and overall program costs,” the officials wrote.

Of the drug classes disclosed, cardiovascular meds brought in the biggest rebates at 26.3%, with hormones and synthetic substitutes following at 25%. Central nervous system drugs brought in rebates equal to 13% of spending, toward the bottom of classes listed.

Harvoni isn't the only big-spending drug

As for big-spending drugs, following Harvoni in total Medicare spending for last year were Sanofi’s diabetes med Lantus, AstraZeneca’s statin drug Crestor, GlaxoSmithKline’s respiratory inhaler Advair and Boehringer’s respiratory rival Spiriva. Medicare doled out more than $2 billion for each of the meds. Per-unit costs for Lantus, Crestor and Spiriva each increased by double digits over 2014.

In total Medicaid spending behind Gilead’s hep C cure were Otsuka’s antipsychotic drug Abilify, Lantus, AbbVie’s anti-inflammatory Humira and Shire’s ADHD drug Vyvanse. All of the drugs in Medicaid’s top 5 spending saw price hikes of more than 10% except for Harvoni, which didn’t change compared to 2014.

Harvoni actually lost some ground in pricing for Medicare, with the agency reporting that the drug’s per-unit cost decreased 1% compared to 2014.

Last year’s $457 billion represents a significant jump over $367 billion in 2012, and CMS officials wrote Monday that costs are only set to rise. The annual increase is expected to run at 6.7% through 2025, they said.

CMS’ new spending figures come as the industry seeks to defend itself against sharp criticism from politicians and the public and after more than a year of close attention to price hikes and drug spending.