Association between physician adoption of a new oral anti-diabetic medication and Medicare and Medicaid drug spending

Background In the United States, there is well-documented regional variation in prescription drug spending. However, the specific role of physician adoption of brand name drugs on the variation in patient-level prescription drug spending is still being investigated across a multitude of drug classes. Our study aims to add to the literature by determining the association between physician adoption of a first-in-class anti-diabetic (AD) drug, sitagliptin, and AD drug spending in the Medicare and Medicaid populations in Pennsylvania. Methods We obtained physician-level data from QuintilesIMS Xponent™ database for Pennsylvania and constructed county-level measures of time to adoption and share of physicians adopting sitagliptin in its first year post-introduction. We additionally measured total AD drug spending for all Medicare fee-for-service and Part D enrollees (N = 125,264) and all Medicaid (N = 50,836) enrollees with type II diabetes in Pennsylvania for 2011. Finite mixture model regression, adjusting for patient socio-demographic/clinical characteristics, was used to examine the association between physician adoption of sitagliptin and AD drug spending. Results Physician adoption of sitagliptin varied from 44 to 99% across the state’s 67 counties. Average per capita AD spending was $1340 (SD $1764) in Medicare and $1291 (SD $1881) in Medicaid. A 10% increase in the share of physicians adopting sitagliptin in a county was associated with a 3.5% (95% CI: 2.0–4.9) and 5.3% (95% CI: 0.3–10.3) increase in drug spending for the Medicare and Medicaid populations, respectively. Conclusions In a medication market with many choices, county-level adoption of sitagliptin was positively associated with AD spending in Medicare and Medicaid, two programs with different approaches to formulary management.