Trends and current drug utilization patterns of Medicaid beneficiaries

Health Care Financing Review, Spring, 2006 by Terry R. Lied, Julio Gonzalez, Wendy Taparanskas, Tejas Shukla

Table 5 displays the number of prescriptions, total reimbursement amounts, and mean reimbursement for the drug brands that comprised the top 40 drugs in 1998 and 2003 (5). Only 14 of the top 40 drugs in 2003, in terms of total reimbursements, were also on the top 40 list in 1998. However, Zyprexa and Risperdal, drugs primarily used to treat psychoses, were the number one and number two Medicaid drugs in terms of reimbursements in both 1998 and 2003. Between 1998 and 2003, the number of prescriptions for Zyprexa increased by 145 percent from 2.3 to 5.6 million. The number of prescriptions for Risperdal increased by 110 percent from 2.9 to 6.1 million.

SUMMARY AND DISCUSSION

This study used national Medicaid data from 1994-2003 to investigate trends in noninstitutional drug utilization and expenditures in the Medicaid Program. We found that there was a substantial increase in both drug utilization and expenditures during this timeframe. In itself, this is not too surprising given the growth of the pharmaceutical industry and the development of many new and safer drugs that are being used effectively to both prevent and treat illness. Increased utilization, however, has been the result of several other factors including increases in (1) Medicaid enrollment, (2) the mean number of prescriptions per enrollee, (3) mean nominal and inflation-adjusted reimbursement per prescription, and (4) the tendency for increased use of new and more expensive drugs.

In 2003, the top three drug groups in terms of reimbursements were CNS drugs, cardiovascular agents, and anti-infective agents. CNS drugs accounted for more than 1 in 5 drug dollars spent on Medicaid beneficiaries in that year. The top drugs in the CNS group in terms of expenditures were Zyprexa, Risperdal, and Seroquel, which were also the top three drugs overall. All three of these drugs are used to treat psychoses. Among the top 40 drugs in terms of Medicaid reimbursements in 2003, not one was a generic.

It is clear that efforts to control Medicaid spending cannot overlook the considerable growth in drug expenditures that has occurred over the past 10 years or more. In the entire mix of Medicaid services, drugs are now a much more prominent factor than they were a decade ago, and there is no sign that this dominance will abate in the foreseeable future. If anything the predominance and costs of drugs in the treatment of disease are likely to increase over the next few years. It also seems likely that a relatively select group of drugs, many of them among the newest, will dominate the market for each year in the foreseeable future, even though many of the specific drugs dominating the market may change from year to year. The question for policymakers will be how to ensure that beneficiaries have access to the most safe and effective drugs while simultaneously ensuring that the spending on drugs is affordable.

Under the 2003 MMA, dually eligible beneficiaries who are eligible for both Medicare and full-benefit Medicaid services will be receiving their drug benefits under Medicare in 2006, and beyond. These individuals currently account for nearly 50 percent of all Medicaid drug expenditures. They are both older and more likely to be disabled than non-dually eligible Medicaid beneficiaries, thus accounting for much of their tendency toward higher utilization of drugs and other medical services. It is important that their drug utilization continue to be studied as they transition from Medicaid to Medicare coverage for their drug coverage.