OBJECTIVES: Medicare reimburses clinicians average sales price (ASP) plus a percentage add-on payment for injection and infusion (Part B) drugs. Medicare spending on Part B drugs has grown about 9% annually for the last decade, driven by price increases for existing drugs and high prices for new entrants. Recent legislation to reduce Part B drug spending has focused on price negotiation for drugs after a period of exclusivity (9 to 12 years in Build Back Better). An alternative is to reform payment for drugs offering low added therapeutic benefit.

METHODS: We conducted a retrospective analysis using 2019 Medicare Part B . We studied expensive drugs, defined as those with average annual spending per beneficiary exceeding the average Social Security benefit ($17,532 in 2019). We reviewed added benefit assessments from France (Haute Autorité de Santé) and Canada (Patented Medicine Prices Review Board).

RESULTS: In 2019, there were 120 expensive drugs with spending totaling $15.5 billion (42.9% of Part B drug spending). Of the 120 drugs, 54 had low added therapeutic benefit, 24 had moderate added therapeutic benefit, 17 had high added therapeutic benefit, and 25 had not undergone an assessment in France or Canada. Among the 54 expensive drugs with low added therapeutic benefit, 38 were recent entrants and would not be eligible for negotiation under Build Back Better even if enacted.

CONCLUSIONS: A large share of Part B drug spending is attributable to expensive Part B drugs that offer low added therapeutic benefit and would not be targeted by legislation like Build Back Better, demonstrating the usefulness of considering alternative payment reforms. Policymakers should consider alternative payment models for these drugs, such as setting reimbursement based on the ASP of the lowest cost alternative or reimbursing at a lower percentage of ASP.