In an effort to contain Medicare Part B drug spending, some policymakers are exploring the merits of Medicare negotiation through binding arbitration, establishment of a national formulary, or government price controls. Given that Medicare is a prominent payer in healthcare, proponents of increased government negotiation argue that Medicare could effectively negotiate lower drug prices, especially for specialty biologics covered by the Part B program. However, other stakeholders are concerned that such proposals could reduce access to medicines and limit patient and provider choice.

In light of this debate, Avalere analyzed coverage for physician-administered drugs available through the US Department of Veterans Affairs (VA).  The VA maintains a national formulary that includes drugs based on an internal analysis considering both cost and efficacy. In June 2017, the agency also announced plans to use value assessments by the Institute for Clinical and Economic Review as a component of the formulary development process.

Using the Medicare Part B drug spending dashboard and the VA National Formulary, Avalere found that 24 of the top 50 non-vaccine Medicare Part B drugs (by spending) are not listed on the VA National Formulary.  In 2017, about 1.3 million Medicare beneficiaries took any of the drugs not listed by the VA.  In addition, most biologics for which biosimilars are available are not listed by the VA National Formulary. With respect to biosimilars, Avalere also reviewed changes made to the VA National Formulary during 2015–2019 and found that when more than one biosimilar has been available for the same product, the particular biosimilar included on formulary has changed over time.

The VA health benefit offers one domestic example of a government health program that leverages a nationwide formulary along with a centralized way to purchase and distribute prescription drugs.

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Methodology

This analysis was conducted in July 2019 using the 2017 Medicare Part B Drug Spending Dashboard and the July 2019 VA National Formulary. Avalere identified the top 50 non-vaccine Medicare Part B drugs by spend.

Funding for this research was provided by the Pharmaceutical Research and Manufacturers of America (PhRMA). Avalere Health retained full editorial control.