Effect of evergreened reformulations on medicaid expenditures and patient access from 2008 to 2016

Abstract

BACKGROUND: Annual spending on retail and nonretail prescription drugs exceeds $450 billion and is projected to outpace growth in all other national health expenditure categories over the next decade. Evergreened reformulations of drugs, defined here as extended-release or other reformulations that came to market more than 2 years after initial approval of the immediate-release product, increase drug spending and delay patient access to extended-release formulations. Reforming drug approval incentives may encourage earlier introduction of extended-release formulations, hastening generic adoption and patient access. OBJECTIVES: To (a) systematically identify evergreened reformulations, defined as reformulations that extend drug exclusivity (i.e., extended-release or other reformulations that came to market more than 2 years after initial approval of the immediate-release product), and (b) estimate the effect on Medicaid spending and the delay in patient access to extended-release formulations. METHODS: Evergreened reformulations were identified using FDA Orange Book drug approval data (1982-2018); these data were used to characterize mean time from initial brand approval to evergreen reformulation approval and subsequent generic approval. Medicaid expenditure data from 2008-2016 were used to estimate increased expenditures from delayed introduction of generic extended-release formulations. Outcome measurements include time from FDA approval of immediate-release brand drug to evergreened reformulation extended-release brand drug approval, annual generic share of immediate-release and extended-release prescriptions in Medicaid, and annual price difference between brand and generic prescriptions in Medicaid. RESULTS: 73 drug active ingredients were subject to evergreened reformulations; these evergreened reformulations increased Medicaid expenditures by $9.35 billion from 2008-2016. Among reformulations that increased expenditures by over $100 million each, the mean time between the initial brand approval and evergreen reformulation approval was 8.1 years (SD=3.9; median=8.8; interquartile range [IQR]=3.7-11.7); across all evergreened reformulations where the initial drug was approved after January 1, 1982, the mean was 7.9 years (SD=4.3; median=6.8; IQR=4.0-11.0). CONCLUSIONS: Evergreened reformulations increase Medicaid drug expenditures and delay patient access to extended-release formulations. Reforming drug approval laws could alter market incentives for evergreened reformulations, decreasing spending and hastening patient access to extended-release products.