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Impact of Passing Through Negotiated Rebates for Oral Antidiabetic Drugs (OADs) on Annual OAD Spending

Industry: Healthcare
Current: Market Sizing & Shares

Diabetes Mellitus (DM) is a major and growing challenge globally
Sharing manufacturer rebates for brand OADs directly with commercially insured patients can reduce their net drug out-of-pocket spending
GlobalData estimates that average annual OAD spending per commercially insured beneficiary differs by race/ethnicity

Impact of Passing Through Negotiated Rebates for Oral Antidiabetic Drugs (OADs) on Annual OAD Spending

The Centers for Disease Control and Prevention estimates that 13% of all the US adults have diabetes, and even more meet criteria for prediabetes. DM imposes substantial health and economic burdens on individuals with the disease, their families, the healthcare system, and society. It has been estimated that the total economic cost of diagnosed DM in the US reached $327 billion in 2017—$237 billion in direct medical costs and $90 billion in reduced productivity. At the same time, racial disparities in the management and outcomes of DM are well documented; Black patients with DM are four times more likely to have lower extremity amputations compared to white patients, and Hispanics are reported to have twice the mortality from DM compared to white DM patients. Achieving and maintaining target blood glucose level is an essential principle in managing DM and mitigating its related complications.

High out-of-pocket (OOP) costs for diabetes medicines are key barriers to taking prescribed medicines that can reduce risk of diabetes complications, hospitalization and emergency visits, and associated healthcare costs. One option to reduce patient out-of-pocket costs is to restructure how health plans share negotiated rebates, discounts, and other payments received from pharmaceutical manufacturers with insured patients. Sharing negotiated rebates directly with patients would substantially reduce patient out-of-pocket costs, while also alleviating a major barrier affecting access to medicines for disadvantaged populations.

The average annual OAD spending per commercially insured beneficiary, High-Deductible Health Plan (HDHP) and Preferred Provider Organization (PPO) combined, with Type 2 Diabetes Mellitus (T2DM) treated with brand OADs was $2,125 in 2018—of which HDHP patients paid $2,417 OOP, while PPO patients paid $1,496 OOP. GlobalData analysis also estimated that the average annual OAD spending per commercially insured beneficiary differs by race/ethnicity; for example, the average white patient spends $2,145 on brand OADs annually, while the average Hispanic patient spends $1,651.

When simulating a policy that would share negotiated rebates directly with patients and lower the OOP cost per fill, GlobalData’s report on “The Impact of Sharing Manufacturer Rebates for Oral Anti-Diabetic Medications at the Point of Sale with Patients in the Commercial Market” estimated that average total annual OAD spending would increase by 6-7% as patients are expected to fill more of their prescriptions. The relative increase in OAD spending is most pronounced among Hispanic patients (11-13% increase). Yet, considering that under the post-shared rebates scenario patients’ cost sharing would be based on the net price of the drugs instead of undiscounted list price, Hispanic patients’ OOP OAD spending is expected to decrease by approximately 31%.