The influence of Medicare Part D on the list pricing of brand drugs

Objective: To compare the Medicare Part D market share of brand drugs with their net-to-list price ratio.

Data sources and study setting: SSR Health Brand Net Price Tool and Medical Expenditure Panel Survey, 2007-2019.

Study design: For each drug, we calculated the ratio of net to list price and the percent of users that were Medicare-eligible. We compared these cross-sectionally in each year and estimated a difference-in-differences model comparing drugs with high or low Medicare market shares (MMS) after following changes to program incentives in 2010.

Data collection/extraction methods: The sample included brand drugs without generic competitors appearing in both datasets.

Principal findings: Net-to-list price ratios were negatively correlated with MMS in the later years of our sample. In 2019, a 10% increase in MMS was associated with a significant 4.6% [95% CI: 2.1%, 7.1%] decrease in net-to-list ratio. Difference-in-differences showed net-to-list price ratios of drugs with above median MMS fell relative to those with below median MMS. By 2019, we observe an absolute reduction of -0.2 [95% CI: -0.29, -0.11], representing 28% reduction relative to the average ratio in 2010.

Conclusions: Greater exposure to the Medicare Part D market was associated with larger differences between net and list prices of drugs.