State analysis: prescription drug spending rose as fills fell, CHIA tells GIC

The Group Insurance Commission heard on Thursday from the Center for Health Information and Analysis (CHIA) that pharmacy spending is now the largest component of state health care expenditures and a primary driver of recent cost growth.

Lauren Peters, CHIA executive director, told commissioners the state’s total health care expenditures rose to $71.7 billion in 2022 and that pharmacy spending reached about $13.6 billion, making pharmacy the largest service category that year. Peters said payer-reported pharmacy rebates lowered gross pharmacy spending by an estimated $3.5 billion in 2022 but that, “regardless of how you count it…pharmacy spending is and remains the largest cost driver in our system.”

Molly Bailey, an associate manager on CHIA’s health informatics and reporting team, reviewed the technical scope of CHIA’s commercial prescription analysis. She said the report focuses on fully insured commercial retail and mail-order pharmacy claims captured in the state All-Payer Claims Database (APCD) and covers roughly 1.4 million covered lives per year in Massachusetts. Bailey emphasized that CHIA’s dataset does not include manufacturer list prices or rebate amounts at the drug level and excludes drugs administered under the medical benefit (inpatient and many outpatient infusions).

CHIA’s headline findings: between 2018 and 2022 the number of prescriptions in the fully insured commercial APCD fell about 25% while average cost per prescription rose about 54%. CHIA concluded the net spending increase over the period was driven primarily by higher unit prices rather than greater utilization. The immunosuppressant therapeutic class was the single largest driver of prescription spending across the study period; CHIA cited brand-name agents such as Humira and Stelara among the highest-cost products.

CHIA also presented member-impact metrics. For the top drugs by spending in 2022 CHIA estimated member out-of-pocket ranges of roughly $79 to $287 per prescription for the highest-cost, low-volume brand drugs, while high-utilization generic drugs showed out-of-pocket averages of about $4–$6 per fill. CHIA reported payers paid on average about $13 per member per month out-of-pocket in 2022 for prescription drugs (about 10% of total prescription spending).

Commissioners asked questions about the APCD’s scope and limitations. Chair Valerie Sullivan and others pressed CHIA on whether cash-paid fills or self-insured employer claims are included; CHIA clarified the analysis was limited to Massachusetts fully insured commercial claims and does not capture cash-only transactions. Commissioners also asked about inpatient/outpatient medical-benefit drugs and demographic drivers; CHIA said the agency is beginning to add medical-benefit breakouts and plans further work to examine demographic and utilization drivers in follow-up analyses.

CHIA closed by pointing commissioners to an interactive dashboard and dataset released with the report and agreed to supply additional analysis on generic pricing changes and on drugs administered via the medical benefit if the commission requests it. The presentation set the stage for a planned fall follow-up on prescription drug trends and PBM utilization management that the GIC’s staff said they will schedule.