With Medicare expenditures on Stelara increasing nearly tenfold, a new report from the HHS Office of Inspector General has found major differences in drug payment amounts under Part B versus Part D.
Medicare expenditures on Johnson & Johnson’s biologic Stelara, used for treating psoriatic arthritis, Crohn’s disease and ulcerative colitis, have skyrocketed nearly tenfold from $300 million in 2016 to almost $3 billion in 2023. A report released Friday by the Department of Health and Human Services’ Office of Inspector General has found big differences in the methods used to set drug payment amounts under Medicare Part B versus Part D.
“OIG found that when Stelara was being covered under Part B and administered by physicians in their offices, it was costing the Medicare program and most enrollees far less than when it was being covered under Part D, and enrollees were self-administering the drug at home,” the report said.
The report found that in 2021 the annual cost per enrollee for Stelara was 80% more under Part D than Part B. The average Part B costs for a Stelara injection remained relatively flat between 2016 and 2023, dropping from over $14,450 per shot to approximately $13,000, according to the OIG.
At the same time, Part D customers saw an 84% rise in costs during the same period, rising from over $17,000 per shot in 2016 to more than $32,000 last year.
In 2022, Medicare and its enrollees paid approximately $2.4 billion for Stelara, with $62 million in Part B and $2.3 billion in Part D.
“Our findings illustrate how differences in the methods used to set drug payment amounts under Part B (i.e., manufacturers’ sales prices) versus under Part D (i.e., negotiations between plan sponsors, manufacturers, pharmacy benefit managers, and pharmacies) result in widely different payment amounts for the same drugs,” the OIG said.
Stelara, which the OIG report describes as a “high cost” prescription biologic, is usually self-injected and covered under Part D. Prior to 2023, having the medicine administered by a physician under Part B was also an option. However, Medicare Administrative Contractors are now excluding Stelara Injections after the contractors made changes to place injectable versions of the biologic on the self-administered drug exclusion list.
According to the OIG report, Stelara injections are subject to a policy to omit self-administered drugs from Part B coverage. Ultimately, the report noted that with Stelara now only being obtained in a pharmacy, patients could face higher out-of-pocket costs.
With Stelara named to the first 10 medicines impacted by the Inflation Reduction Act’s Medicare Drug Price Negotiation Program, the Biden administration is looking to bring down the cost of the biologic.
Still, Stelara remains a significant earner for J&J, pulling in over $2.8 billion in sales in the second quarter of 2024. However, the drug is also facing biosimilar competition from Teva and Alvotech, as well as Samsung Bioepis, with launches slated for early 2025.
