1. Cost Offsets from Recommended Medications for Medicare Beneficiaries with Diabetes AcademyHealth June 9, 2008 Bruce Stuart,* Linda Simoni-Wastila,* Lirong Zhao,* Jennifer Lloyd,* Jalpa Doshi** *The Peter Lamy Center on Drug Therapy and Aging, University of Maryland Baltimore **University of Pennsylvania School of Medicine

2. Page 2 The Peter Lamy Center on Drug Therapy and Aging Background Burden of Diabetes on the Medicare Program 25% of Medicare beneficiaries have diabetes mellitus (DM) Beneficiaries with DM spend 50% more on medical care Can drug regimens for DM reduce costs in traditional Medicare? Clinical trial studies Observational studies Decision analysis (Rosen et al., 2005)

3. Page 3 The Peter Lamy Center on Drug Therapy and Aging Study Objectives 1.Assess impact of utilization and spending for selected classes of drugs recommended by DM guidelines on spending for traditional Medicare services. Antidiabetic agents (older and newer oral hypoglycemic agents, insulin) RAASIs (ACE inhibitors, ARBs) Statins and other lipid lowering medications 2.Determine whether impacts vary with beneficiaries’ overall burden of illness

4. Page 4 The Peter Lamy Center on Drug Therapy and Aging Data and Study Sample Data Pooled panel of MCBS files, 1997 - 2004 Study Sample Inclusion criteria: self report of DM and/or ICD-9 codes: 250.xx, 357.2, 362.01, 362.02, 366.41 Exclusion criteria: LTC resident, enrolled in Medicare less than full year, Medicare HMO enrollee, incomplete surveys Final study sample: N=7,441 individuals contributing 14,317 person-year observations

5. Page 5 The Peter Lamy Center on Drug Therapy and Aging Measures Burden of Illness Sample divided into quintiles based on cumulative medical spending Dependent Variable Annual Medicare payments in constant 2006 dollars Explanatory Variables Drug utilization/spending, demographics (age, sex, race, census region), economic variables (income, prescription coverage), health (self-reported, ADLs, BMI, diabetes complications, chronic kidney disease, hypertension, CAD, CHF, hyperlipidemia, COPD, arthritis, death), denominator days

6. Page 6 The Peter Lamy Center on Drug Therapy and Aging Analytical Strategy Quintile-specific Medicare expenditure regressions with person-year as unit of analysis - drug user versus nonuser - fills per user of each drug type - Spending on each drug type All models estimated using GLM with gamma distribution and log link in Stata with robust command to control for repeated measures Extensive sensitivity tests including difference equations

7. Page 7 The Peter Lamy Center on Drug Therapy and Aging Selected Descriptive Results

8. Page 8 The Peter Lamy Center on Drug Therapy and Aging Annual Medicare Spending by Quintile for Study Sample with Diabetes (2006 $)

9. Page 9 The Peter Lamy Center on Drug Therapy and Aging Annual Spending on Antidiabetic Drugs (2006 $)

10. Page 10 The Peter Lamy Center on Drug Therapy and Aging Annual Spending on RAASIs and Lipid Lowering Drugs (2006 $)

11. Page 11 The Peter Lamy Center on Drug Therapy and Aging Selected Multivariate Results

12. Page 12 The Peter Lamy Center on Drug Therapy and Aging Marginal Effects on Medicare Spending of Being a Medication User Drug ClassFull SampleQuintile 1Quintile 5 Older DM Drugs-$577**-$8-$2,313* Newer AD drugs-$268$47-$1,620 Insulins$1,242-$98*$1,807 ACE inhibitors-$674**-$100**-$1,727 ARBs-$709**-$37-$670 Statins-$380-$79**-$362 Other LL drugs$318-$88*-$336 * p<.05; ** p<.01

13. Page 13 The Peter Lamy Center on Drug Therapy and Aging Marginal Effects on Medicare Spending of an Additional Prescription Fill by Medication Users Drug ClassFull SampleQuintile 1Quintile 5 Older AD drugs-$71.12**-$7.59**-$406.87** Newer AD drugs$66.29$4.66-$237.09 ACE inhibitors-$164.24**-$8.95*-$331.83* ARBs-$158.53*-$5.51-$108.93 Statins-$107.01*-$15.09**-$460.80* *p<,05; **p<.01 Note: Insulin and other LL drugs dropped due to small samples

14. Page 14 The Peter Lamy Center on Drug Therapy and Aging Marginal Effects on Medicare Spending of an Additional $ in Drug Spending Drug ClassFull SampleQuintile 1Quintile 5 Older DM Drugs-$1.65**-$0.11**-$9.32** Newer AD drugs-$0.10-$0.11-$1.47 Insulins$2.41-$0.23$6.86 ACE inhibitors-$2.52**-$0.34**-$5.76* ARBs-$2.52**-$0.12-$6.77* Statins-$0.59**-$0.22**-$3.20** Other LL drugs-$0.76-$0.39**-$8.54** * p<.05; ** p<.01

15. Page 15 The Peter Lamy Center on Drug Therapy and Aging Conclusions Being a medication user matters. - Users of older ADs, ACEIs, and ARBs spent between $577 and $709 less on Medicare services compared to nonusers, ceteris paribus Persistency in use matters. - Each added prescription fill by users of the 3 drug groups is associated with between $71 and $164 in lower Medicare costs

16. Page 16 The Peter Lamy Center on Drug Therapy and Aging Conclusions Drug prices matter. - Older AD drugs (primarily generics) cost $49 per fill compared to $163 per fill for newer AD agents (2006 $) Overall burden of illness matters most. - For example each dollar spent on older AD drugs by beneficiaries in quintile 1 is associated with 11 cents in lower Medicare costs, but that same dollar is associated with $9.32 less for those in quintile 5

17. Page 17 The Peter Lamy Center on Drug Therapy and Aging Limitations MCBS drug data are self-reported—possible under-reporting Newer oral AD drugs may be under-represented Possibility of unobserved confounders Data are prior to implementation of Medicare Part D - 70% of sample had drug coverage compared to 90% today

18. Page 18 The Peter Lamy Center on Drug Therapy and Aging Implications for Medicare Part D Improving prevalence and persistency of use of medications recommended for older individuals with diabetes is potentially cost saving to Medicare Highest potential returns from targeting interventions to high spenders (medication therapy management) Greatest long-term returns may lie at the other end of the spectrum if improved medication regimens reduce future complications of diabetes

19. Thank You!