Swenson SM, Chamberlain LJ, Sanders LM, Sundaram V, Wise PH. Outpatient Pharmacy Expenditures for Children With Serious Chronic Illness in California, 2010-2012. JAMA. 2015;314(4):405-407. doi:10.1001/jama.2015.7169
Children with serious chronic conditions are increasingly likely to survive infancy, intensifying demands on health care delivery.1 Medication is one driver of their health care costs.2 High-cost drugs threaten cost-containment efforts.3 We analyzed expenditures for outpatient pharmacy products used by publicly insured children with serious chronic illness during 3 years.
A retrospective analysis of paid claims for children (ages, 0-21 years) was performed using the California Children’s Services (CCS) paid claims data set (2010-2012). Funded partly by Title V of the Social Security Act, the CCS provides insurance coverage, care coordination, and a regionalized system of pediatric specialty care facilities for approximately 180 000 publicly insured children with serious chronic illness. The state defines the range of eligible medical conditions.
The data set includes age, sex, race/ethnicity, county of residence, enrollment dates, primary and secondary eligible diagnoses, claim diagnoses, and procedures for every enrollee; however, it includes full-capture reimbursement information only for fee-for-service enrollees. Approximately 30% of children are enrolled through fee-for-service care and 70% through managed care. This study included children enrolled through fee-for-service care for at least 6 continuous months.
The main outcome was total paid amount for outpatient pharmacy products dispensed. All products identified by the CCS as outpatient pharmacy products and with a National Drug Code or Healthcare Common Procedure Coding System code were included. Medication administration expenditures were excluded. Administrators from the CCS validated a subset of claims, including lowest expenditure quartile claims. Pharmacy products were classified using the American Hospital Formulary System Pharmacologic-Therapeutic Classification hierarchy.4
All unique pharmacy paid claims were summed for each child; the mean and median per-child expenditures over the 3-year period were calculated and reported with standard deviation and interquartile range (IQR), respectively. Each medication class’s mean per-child expenditure and percentage of total pharmacy expenditures were reported. The drug contributing most to expenditures was identified, and its annualized per-child expenditure was calculated only for children enrolled throughout the 3-year period.
Institutional review board approval with a consent waiver was received from Stanford University and California’s Department of Health Care Services. Analyses used SAS/STAT version 9.3 software (SAS Institute Inc).
This analysis examined records of 34 330 children (Table 1). Outpatient pharmacy expenditures totaled $475 718 130 (20% of total health care expenditures); per-child pharmacy expenditures ranged from $0.16 to $56 849 034, and mean and median per-child expenditures were $13 857 (SD, $349 782) and $791 (IQR, $127-$5873), respectively.
The product class of blood formation, coagulation, and thrombosis agents accounted for the greatest share (41.9%) of outpatient pharmacy expenditures (Table 2), and antihemophilic factor represented 98% of this class’s expenditures or 40.9% of total pharmacy expenditures. All children with an antihemophilic factor paid claim (0.4% of cohort) had International Classification of Diseases, Ninth Revision, diagnostic codes for coagulation and hemorrhagic disorders or hemophilia carrier. The mean per-child expenditure for antihemophilic factor was $1 343 262. Among children with antihemophilic factor claims and enrolled for all 3 years, the mean and median per-child annualized expenditures were $634 054 (SD, $2 159 355) and $152 280 (IQR, $19 434-$393 000), respectively.
Outpatient pharmacy expenditures in this population are significantly driven by antihemophilic factor, which accounted for 40.9% of outpatient pharmacy expenditures but served 0.4% of the cohort. Antihemophilic factor is highly efficacious and essential in caring for children with hemophilia, putting pressure on public programs to seek improved pricing mechanisms for antihemophilic factor and other highly efficacious, high-cost medications.
Examining state-to-state variation may provide insights: CCS’s mean per-child antihemophilic factor annual expenditure ($634 054) significantly surpassed that of North Carolina’s Medicaid program ($233 968 in fiscal year 2012)5 and Medicaid programs in 10 other states ($148 215 in 2008).6 However, public programs for children with serious chronic illness vary between states, and care should be taken in making direct program comparisons. Greater transparency of use and costs, and cross-state collaboration, may increase health care value as states revise programs.
Study limitations include lack of clinical data, lack of inpatient pharmacy data, exclusion of children enrolled in managed care, cross-sectional study design, and data spanning only 3 years.
Our study underscores the potential effect of new, expensive but efficacious pharmaceuticals on public insurance programs for children with chronic illness. These findings may inform efforts to enhance value in these programs, particularly as new insurance frameworks, such as accountable care organizations, are considered.
Corresponding Author: Sonja M. Swenson, BA, Center for Health Policy, Center for Primary Care and Outcomes Research, 117 Encina Commons, Stanford University, Stanford, CA 94305 (firstname.lastname@example.org).
Author Contributions: Ms Swenson had full access to all of the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.
Study concept and design: Swenson, Chamberlain, Sanders, Sundaram.
Acquisition, analysis, or interpretation of data: All authors.
Drafting of the manuscript: Swenson, Chamberlain, Sanders.
Critical revision of the manuscript for important intellectual content: All authors.
Statistical analysis: Chamberlain, Sanders, Sundaram.
Obtained funding: Chamberlain, Sanders, Wise.
Administrative, technical, or material support: Swenson, Sanders, Wise.
Study supervision: Swenson, Chamberlain, Sanders, Wise.
Conflict of Interest Disclosures: The authors have completed and submitted the ICMJE Form for Disclosure of Potential Conflicts of Interest and none were reported.
Funding/Support: The work was funded by grant 17591 from the California HealthCare Foundation.
Role of the Funder/Sponsor: The California HealthCare Foundation had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.
Additional Contributions: We acknowledge Benjamin Goldstein, PhD, MPH (Department of Medicine, Stanford University School of Medicine), and Olga Saynina, MA, MBA (Center for Health Policy and Center for Primary Care and Outcomes Research, Stanford University), for their assistance with data analysis. We are also grateful to MyMy C. Buu, MD (Department of Pediatrics, Stanford University School of Medicine), Maureen Sheehan, NP (Lucile Packard Children’s Hospital), and Melissa Yee, PharmD, BCPS (Lucile Packard Children’s Hospital), for their contributions to our classification scheme; N. Ewen Wang, MD (Center for Health Policy and Center for Primary Care and Outcomes Research, Stanford University), for her feedback on our classification scheme and figures; and Margaret Ann Moor (Center for Health Policy and Center for Primary Care and Outcomes Research, Stanford University), for her assistance with the database. No compensation was received for these contributions.