We calculated the prices paid per HRR for the 3 most common generic products and the 3 most common branded products in each of the three categories (i

We calculated the prices paid per HRR for the 3 most common generic products and the 3 most common branded products in each of the three categories (i.e., 6 products per category and 18 products overall). HRRs. Most (75.9%) of that difference was attributable to the cost per prescription ($53 vs. $63). Regional differences in cost per prescription explained 87.5% of expenditure variation for ACE inhibitors and ARBs and 56.3% for statins but only 36.1% for SSRIs and SNRIs. The ratio of branded-drug to total prescriptions, which correlated highly with cost per prescription, ranged across HRRs from 0.24 to 0.45 overall and from 0.24 to 0.55 for ACE inhibitors and ARBs, 0.29 to 0.60 for statins, and 0.15 to 0.51 for SSRIs and SNRIs. CONCLUSIONS Regional variation in Medicare Part D spending results largely from differences in the cost of drugs selected rather than prescription volume. A reduction in branded-drug use in some regions through modification of Part D plan benefits might lower costs without reducing quality of care. (Funded by the National Institute on Aging as well as others.) There is considerable geographic variation in health care spending across the United States,1C5 and a recent study showed regional variation in prescription-drug spending for Medicare Part D enrollees.6 However, the sources of regional variation in drug spending are not well understood. Prescription-drug use and expenditures could be higher in regions with more seriously ill patient populations requiring more medications. Alternatively, expenditures could be higher in regions with greater use of expensive brand-name drugs rather than lower-cost generic equivalents.7,8 Knowledge of whether variation in Medicare drug spending arises principally from differences in volume or medication choice could inform interventions to improve the quality CYM 5442 HCl of prescribing for older adults and to reduce drug costs. We used Medicare Part D data to investigate sources of variation in drug spending. After adjusting for demographic, socioeconomic, and health-status differences, we measured regional variation in pharmaceutical expenditures overall and in three drug categories: angiotensin-convertingCenzyme (ACE) inhibitors and angiotensin-receptor blockers (ARBs), 3-hydroxy-3-methylglutaryl coenzyme A (HMG-CoA) reductase inhibitors (statins), and newer antidepressants (selective serotonin-reuptake inhibitors [SSRIs] and serotoninCnorepinephrine reuptake inhibitors [SNRIs]). CYM 5442 HCl We decomposed regional differences in total and category-specific prescription-drug expenditures into two components: annual prescription volume and the cost of filling each prescription per month. In addition, we hypothesized that this proportion of prescriptions filled as branded products in each region would be strongly associated with cost per prescription. METHODS DATA CYM 5442 HCl SOURCES AND SAMPLE From a 40% random CYM 5442 HCl sample of the 2008 Medicare Denominator file, we identified beneficiaries 65 years of age or older who were continuously enrolled in fee-for-service Medicare and a stand-alone Part D prescription-drug plan (PDP). Medicare Prescription Drug Event files do not contain Medicare Advantage PDP enrollee data; thus, we excluded these beneficiaries. Medicare Prescription Drug Event and Pharmacy Characteristics files include the National Drug Code (NDC), the date the prescription was filled, the quantity dispensed, the number of days of supply, the type of pharmacy (e.g., retail or long-term care), and the amount paid to the pharmacy by the PDP and the beneficiary. The Lexi-Data Basic database (Lexicomp) was used to obtain the drug name, dose, brand or generic status, and active ingredient according to the NDC.9 From the 2008 Medicare Provider Analysis and Review (MEDPAR), Outpatient, Carrier, and Denominator files, we obtained outpatient and inpatient diagnoses, beneficiaries demographic characteristics and ZIP Code, and Part D low-income subsidy (LIS) status. ZIP CodeClevel income and proportion of the population living in poverty were obtained from 2000 Census data.10 We measured individual-level prescription-drug use and expenditures overall and for three drug categories BIMP3 that are widely used by the elderly and that account for a large share of spending, lack over-the-counter substitutes, and include generic options: ACE inhibitors and ARBs, which are close substitutes11; statins; and newer antidepressants (SSRIs and SNRIs). Prescriptions were standardized to a 30-day (considered 1 month).