Association of Branded Prescription Drug Rebate Size and Patient Out-of-Pocket Costs in a Nationally Representative Sample, 2007-2018

Abstract

This cross-sectional study investigates the association of branded prescription drug rebate size and patient out-of-pocket costs.

Key Points

Question

Are prescription drug rebates associated with increased patient out-of-pocket costs?

Findings

In this cross-sectional study of estimated rebates for 444 unique branded drugs with prescriptions filled by 38 131 unique individuals, increased rebate sizes were associated with increased out-of-pocket costs for those with Medicare, commercial insurance, or no insurance. Associations between rebates and out-of-pocket costs were associated with simultaneous increases in list prices.

Meaning

These findings suggest that while drug manufacturers may increase list prices in order to offer larger rebates to insurers, such increases were associated with increased out-of-pocket costs, especially among individuals without insurance.

Abstract

Importance

Over the past decade, branded prescription drug manufacturers have substantially increased list prices while offering larger rebate payments to health care insurers. Whereas larger rebates can partially offset increases in list prices for insurers, patient out-of-pocket costs may be directly associated with list prices for individuals without insurance and indirectly associated with list prices for individuals with insurance through deductibles or coinsurance.

Objective

To investigate the association between rebates and patient out-of-pocket costs and whether this association differs by coverage type (ie, Medicare, commercial, or uninsured) and before and after 2014.

Design, Setting, and Participants

This cross-sectional study was conducted using data from the Medical Expenditure Panel Survey (MEPS) combined with pricing data for single-source branded drugs from SSR Health from 2007 through 2018. The study was conducted among a nationally representative sample of the noninstitutionalized civilian US population. Included individuals were respondents to MEPS with at least 1 prescription for a single-source branded drug who were covered by Medicare or commercial insurance or were uninsured during an entire year. Data analyses were conducted from August 2019 through March 2021.

Exposures

Estimated rebate size.

Main Outcomes and Measures

Out-of-pocket costs per prescription were calculated, adjusting for year and drug.

Results

Among 38 131 individuals with at least 1 prescription, the mean age was 54 years (95% CI, 54 to 55 years), with 22 044 women (57.8%) and 29 086 White individuals (76.3%). The sample included 444 unique drugs with a survey-weighted total of 4.7 billion prescriptions. Estimated mean (SE) rebates increased from $34 ($1) per prescription in 2007 to $374 ($9) per prescription in 2018. The rebate sizes were associated with statistically significant mean out-of-pocket increases per branded prescription of $4 (95% CI, $4 to $4) from 2007 to 2013 and $11 (95% CI, $10 to $12) from 2014 to 2018. From 2014 to 2018, rebate sizes were associated with statistically significant mean increases in out-of-pocket costs per prescription of $13 (95% CI, $12 to $13) for individuals with Medicare, $6 (95% CI, $6 to $7) for individuals with commercial insurance, and $39 (95% CI, $34 to $44) for individuals without insurance. After adjusting for list prices, there was no association between rebates and out-of-pocket costs, with a change from 2014 to 2018 of −$0.01 (95% CI, −$0.04 to $0.02).

Conclusions and Relevance

These findings suggest that drug manufacturers may have provided larger rebates to insurers primarily by increasing list prices and that individuals without insurance had greater cost increases. The results emphasize the need for policy solutions that decouple list prices and out-of-pocket costs.