Sources of regional variation in Medicare Part D drug spending.
BACKGROUND
Sources of regional variation in spending for prescription drugs under Medicare Part D are poorly understood, and such variation may reflect differences in health status, use of effective treatments, or selection of branded drugs over lower-cost generics.


METHODS
We analyzed 2008 Medicare data for 4.7 million beneficiaries for prescription-drug use and expenditures overall and in three drug categories: angiotensin-converting-enzyme (ACE) inhibitors and angiotensin-receptor blockers (ARBs), 3-hydroxy-3-methylglutaryl coenzyme A (HMG-CoA) reductase inhibitors (statins), and selective serotonin-reuptake inhibitors (SSRIs) and serotonin-norepinephrine reuptake inhibitors (SNRIs). Differences in per capita expenditures across hospital-referral regions (HRRs) were decomposed into annual prescription volume and cost per prescription. The ratio of prescriptions filled as branded drugs to all prescriptions filled was calculated. We adjusted all measures for demographic, socioeconomic, and health-status differences.


RESULTS
Mean adjusted per capita pharmaceutical spending ranged from $2,413 in the lowest to $3,008 in the highest quintile of HRRs. Most (75.9%) of that difference was attributable to the cost per prescription ($53 vs. $63). Regional differences in cost per prescription explained 87.5% of expenditure variation for ACE inhibitors and ARBs and 56.3% for statins but only 36.1% for SSRIs and SNRIs. The ratio of branded-drug to total prescriptions, which correlated highly with cost per prescription, ranged across HRRs from 0.24 to 0.45 overall and from 0.24 to 0.55 for ACE inhibitors and ARBs, 0.29 to 0.60 for statins, and 0.15 to 0.51 for SSRIs and SNRIs.


CONCLUSIONS
Regional variation in Medicare Part D spending results largely from differences in the cost of drugs selected rather than prescription volume. A reduction in branded-drug use in some regions through modification of Part D plan benefits might lower costs without reducing quality of care. (Funded by the National Institute on Aging and others.).
Department of Health Policy and Management, Graduate School of Public Health, University of Pittsburgh, Pittsburgh, PA 15261, USA. jdonohue@pitt.edu
Julie M
JM
Donohue
Nancy E
NE
Morden
Walid F
WF
Gellad
Julie P
JP
Bynum
Weiping
W
Zhou
Joseph T
JT
Hanlon
Jonathan
J
Skinner
D000368:Aged; D057911:Angiotensin Receptor Antagonists / Q000191:economics; D000806:Angiotensin-Converting Enzyme Inhibitors / Q000191:economics; D018687:Antidepressive Agents, Second-Generation / Q000191:economics; D011307:Drug Prescriptions / Q000706:statistics & numerical data*; D018588:Fee-for-Service Plans; D005102:Health Expenditures; D006801:Humans; D019161:Hydroxymethylglutaryl-CoA Reductase Inhibitors / Q000191:economics; D054524:Medicare Part D / Q000191:economics*; D055553:Prescription Drugs / Q000191:economics*; D017367:Selective Serotonin Reuptake Inhibitors / Q000191:economics; D014481:United States
D057911:Angiotensin Receptor Antagonists; D000806:Angiotensin-Converting Enzyme Inhibitors; D018687:Antidepressive Agents, Second-Generation; D019161:Hydroxymethylglutaryl-CoA Reductase Inhibitors; D055553:Prescription Drugs; D017367:Selective Serotonin Reuptake Inhibitors