Background What is an FBO? FAA defines an FBO as a business granted the right by the airport to operate fueling facilities, hangars, aircraft tie-downs, aircraft rental, aircraft maintenance, flight instruction, and other aeronautical services at an airport. In addition, FBOs sometimes manage parking ramps for transient aircraft at the airport. FBOs may charge a fee for parking, as they also maintain the ramp areas for the airport. According to FAA, airports, within certain parameters, have the ability to charge or not to charge users for access to airport ramp space. FBOs generally serve pilots who operate general aviation aircraft, but can also support commercial flights. The type of amenities and services any one FBO provides varies. For example, representatives of one FBO said that it provides high-level customer service and offers more services such as catering, pilot lounges, concierge services, and aircraft maintenance and repair facilities for its clients. See figure 1 for an illustration of FBO services. As of March 2019, we identified 3,070 FBOs operating at 3,016 airports located in the contiguous United States; these airports are included in FAA’s National Plan of Integrated Airport Systems (NPIAS). FBOs can be run by the airport, an independent operator, or a network chain with multiple locations. The Transportation Research Board estimated in 2016 that 47 percent of all FBO locations were airport-operated. Most stakeholders with whom we spoke agreed that there are fewer FBOs today than in the past, although estimates vary on the extent of the decline in FBO numbers. Stakeholders we interviewed said that this decline is due to factors such as a drop in general aviation activity that resulted in a reduction in fuel sales. More recent innovations, such as more fuel-efficient aircraft and decision-making software that provides information to pilots on where to purchase fuel to fly more efficiently, also contributed to the decline. Airport and Federal Oversight of FBO Activities Airports that receive federal AIP grants contractually agree to FAA “grant assurances” that require those airports to adhere to certain requirements. One of those key grant assurances is a prohibition of unjust economic discrimination. This assurance requires airports to provide to users equal access to airport facilities. Likewise, tenant businesses (e.g. FBOs) operating at airports are required to make services available and price those services not in an unduly discriminatory fashion. Although FAA is required to ensure that airports, as a condition for accepting federal grants, provide fair and equal access to services and nondiscriminatory pricing, FAA does not regulate prices in the FBO industry. As a condition of accepting federal grants, airports have a responsibility to ensure that they and their contractors and concessionaires abide by the grant assurances. FAA’s Airport Compliance Office oversees airports’ adherence to grant assurances by taking and responding to inquiries and complaints, developing and circulating advisories and guidance documents, and coordinating with airports and industry to conduct compliance training and airport land use inspections. The Department of Justice (DOJ) also plays a role in overseeing the FBO industry under its antitrust responsibilities to preserve competition. For example, in the Final Judgement entered by a federal court in the DOJ’s case regarding the acquisition by BBA Aviation (Signature Flight Support) acquisition of Landmark Aviation, BBA was required to divest FBO facilities in six locations where the transaction would have created a monopoly or duopoly for FBO services. In addition, the court order required BBA to provide advance notice of certain future acquisitions for the 10-year duration of the final judgment. Transparency of FBO Fees Varies by Service Based on our review of FBO and third party websites, we found that fuel prices at FBOs are readily available to anyone on the internet. Nearly all of the pilots we spoke with told us they use these resources for making flight plans. For example, current prices for fuel are readily available on third party websites such as AirNav and Sky Vector, among others, and on about a third of the websites for FBOs we visited. See figure 2 for a representation of a website providing FBO information. However, fees for other services such as for parking and aircraft handling are less transparent. Our review of FBO and third-party websites found that such fees are not always available online, and that fees may vary by type of aircraft, are sometimes waived, and are called by different terms. According to FBO staff we spoke with, fees for services other than fueling can be lengthy and unwieldy to post on their websites for multiple reasons. First, some fees will vary based on the size and approved weight of the aircraft. For example, the price sheet for services other than fuel at one FBO showed fees varying by the aircraft’s approved weight, so there were 11 different prices for each of those services. The same pricing sheet also included prices for dozens of incidental services, such as aircraft towing and lavatory service that are not based on aircraft weight. Additionally, customers may be eligible for discounts on fuel purchases either by volume or through a membership program. FBOs may also waive fees in some cases—for example, with a qualifying fuel purchase an FBO might waive a parking, ramp, or handling fee. Further, a few stakeholders and pilots we spoke to indicated that FBOs don’t always use the same terms for a fee. For example, a landing fee or a ramp fee might be a fee for doing essentially the same thing. Consequently, to find out how much an FBO visit will cost, 16 of the 18 pilots we interviewed told us they call the FBO in advance. Based on information such as their type of aircraft, length of stay, and other services they might require, the FBO provides an estimate of their total cost. Recently, some industry stakeholders have called for increased price transparency and consistency among FBOs regarding how they characterize their fees, and have taken some actions to increase the transparency of fees. A campaign called, “Know Before You Go,” developed through the cooperation of six aviation associations, encourages FBOs to communicate and expeditiously provide available services and a listing of currently applicable posted fuel prices, as well as fees and charges for other available services. Further, the campaign suggests that these fees and charges should be made accessible to aircraft operators online in a user friendly manner and with sufficient clarity. Additionally, it encourages customers to contact the FBO to ask questions so pilots can make informed decisions. In response, one large- chain FBO began posting fees online for piston aircraft at its locations and another FBO company created a trip calculator on its web site for pilots to calculate the cost of their visit (see fig 3). We also found that a third party company recently began a web site that provides FBO parking ramp fees similar to those providing fuel prices. In addition, AOPA invited FBOs to include their fees in the association’s online airport directory. The association also indicated it categorizes the variety of fees into basic types of fees such as landing, using a hanger, or using lavatory service to help clarify what pilots could be expected to pay. In October 2019, AOPA officials indicated that FBOs’ posting of fees had not increased as much as they hoped. Various Cost and Demand Factors and the Extent of Competition Are Associated with FBO Prices Selected stakeholders we interviewed—including officials from 26 airports, 16 FBOs, as well as 18 general aviation pilots—highlighted key factors that may influence FBO prices at airports across the country. Our statistical model confirmed a correlation between certain key factors identified by stakeholders and FBO prices. Consistent with general economic theory, these factors fall into three groups: (1) an FBO’s costs, (2) demand for an FBO’s services, and (3) competition among FBOs. Stakeholders Reported That Cost Factors May Influence Prices Selected stakeholders we interviewed highlighted cost factors such as airport leases, infrastructure investment, fuel, labor, and security as influencing FBO prices. They cited the following examples: Airport Leases. Airport leases dictate terms and conditions of contracts between an FBO and an airport and include provisions related to the services an FBO must provide for pilots. Depending on the specific requirements or minimum standards developed at a given airport, FBO lease requirements vary and can affect an FBO’s costs. For example, at one airport we visited, the FBO is required to offer an after-hours self-service fueling option, which necessitates the acquisition and maintenance of additional equipment. In another case, the manager at an FBO we spoke to said that its overhead costs are relatively high because it is required to offer flight training and aircraft maintenance as part of its lease. To offer these services the FBO needs additional hangar space and must pay qualified skilled employees. Infrastructure Investment. As with leasing costs, the greater the investment an FBO makes at an airport, the higher its prices to users may be. According to airport and interest group officials we spoke with, FBOs typically have 20 to 30 year leases during which they may make infrastructure investments such as building hangars or lounges, based on FBO’s assessment of customer demand for its services. For example, according to airport and FBO officials we spoke to, an FBO will choose to invest in high-end facilities and amenities if it determines there is sufficient demand and revenues earned are expected to be sufficient to recoup the costs over the term of the lease. Fuel Transportation Costs. FBOs generally sell two types of aviation fuel for general aviation aircraft: Jet A and 100 low lead (100LL). Jet A is generally delivered over long distances via pipeline. According to one petroleum company, 100LL is generally moved by truck, rail, or barge—less cost-effective methods of transport than pipeline—due to the smaller volumes being produced. Further, there are parts of the United States, specifically on the East Coast, where little or no 100LL is produced and, as a result, transportation costs can significantly affect the cost of fuel to the FBO. Labor costs. FBOs compete in the local labor market for staff. The cost of labor for FBOs may vary across local labor markets around the country. Further, a particular FBO may need specialized skills to provide the services they offer, and this factor can affect the FBO’s costs. For example, some FBOs offer maintenance services, so will have trained mechanics on staff to perform such services. State taxes. Aviation fuel excise taxes on 100LL vary considerably from state to state and may also affect the costs to a consumer. For example, both Oregon and Idaho have a lower state aviation fuel tax compared to neighboring Washington State. An FBO manager told us that in some cases, a pilot will fly over to Idaho to obtain less expensive fuel, even though he or she may base the aircraft in Washington. Security. Some airports—particularly those with commercial service—are responsible for implementing security requirements in accordance with their Transportation Security Administration (TSA)- approved security programs, notably the security of perimeters and access controls protecting restricted areas of the airport, such as ramps and taxiways. We found that some FBOs are responsible for security and access controls on their leased property based on our review of individual lease requirements and the airport security plan. These FBOs might require staff on site 24 hours a day to maintain airfield and perimeter security, a requirement that can increase FBO costs. For example, an FBO operating at an airport with commercial service told us that it is responsible for perimeter security on the land it leases from the airport. In addition, it is subject to unannounced security checks by TSA. In contrast, smaller general aviation airports without commercial service are not required to have as many security requirements. Stakeholders Said Demand Factors May Influence Prices Selected stakeholders told us that the location of an airport may influence demand for FBO services. Economic theory indicates that increased demand for a service will generally result in increased prices, all else equal. In particular, stakeholders cited the following examples of demand factors that may influence prices: Busy and congested airports may have higher prices for FBO services due to greater demand. Prices may be higher during part of the year in locations with significant seasonal traffic, such as beach resorts with a summer high season and ski resorts with a winter high season. The increased demand at FBOs during high seasons results in higher prices than during the off season. An airport’s proximity to the central business district may be associated with higher demand and higher prices in such locations. Stakeholders Described How the Extent of Competition May Influence FBO Prices In addition to cost and demand factors, the extent to which the market for FBO services is competitive may also influence prices. According to the stakeholders we interviewed, competition among FBOs may lead to lower prices than would be the case when only one FBO provides the service at that airport. In our analysis of FAA airport and FBO data, however, we found that nearly 90 percent of NPIAS airports that offer FBO services are served by only one FBO (see table 1). According to a Transportation Research Board report, a strong indicator of the number of FBOs that can be financially viable at an airport can be the amount of fuel sales. For example, two airport managers we spoke to said that there was an insufficient volume of fuel sold at their airports to support more than one FBO. While the majority of NPIAS airports in the contiguous United States have only one FBO, pilots we spoke to said that competition from FBOs at nearby airports can also affect prices. For example, within 30 miles of Spokane International Airport, there are five other airports, each of which is served by an FBO that may compete with the services provided at Spokane International. (See fig. 4) We asked selected managers of FBOs and airports and selected general aviation pilots to describe how off-airport competition may influence FBO pricing. FBO and airport managers told us that they view nearby airports as competitors and monitor the FBO prices at these locations. For example, an FBO manager in Maine told us he regularly checks the prices at the larger international airport that is nearby. This finding suggests that when an FBO sets its prices, it takes into account the extent to which nearby airports may compete for its services. On the buyer’s side of the market, 11 of the 18 general aviation pilots we interviewed told us that they generally “price shop” for aviation fuel. Further, most general aviation pilots we spoke with told us they use online flight-planning tools to map their route and consider the fuel cost and service fees of the airports along that route. Further, four pilots and an FBO manager indicated that on longer trips that require refueling before reaching a destination, pilots may have options that are hundreds of miles from each other. For example, when flying from California to Texas, a pilot could choose to stop either in New Mexico or Arizona to obtain fuel. In this scenario, a pilot would compare prices of many FBOs in those two states and likely choose one with lower fuel prices. Likewise, an FBO manager in Kansas indicated that for these types of customers, he competes with FBOs at airports more than 100 miles away. However, we interviewed some pilots who said that they do not consider every nearby airport as a substitute. To be a true substitute the airport must meet the pilot’s needs to be a viable option. For example, the airport’s runway must be of sufficient length for the aircraft, and some runways may be too short for certain aircraft. Also, pilots take into account the type of fuel offered at an FBO. The pilot of a piston-driven aircraft will be unable to refuel at an FBO that offers only jet fuel. Finally, some pilots said the price differential would need to be sufficiently large to compensate them for any inconvenience. Some mentioned that the price of 100LL would have to be 30 to 40 cents per gallon lower to affect their flight plan, while others put that threshold at a lower point, 25 to 30 cents per gallon. Pilots also told us they take travel time into account. For example, some pilots said that they would consider landing at an alternative airport with lower prices if it were no more than 20 to 30 miles out of their way and if the change in destination were to add no more than 10 to 20 minutes to their trip. As a first step in examining the relationship of FBO competition with pricing, we examined differences in the average posted prices for 100LL and Jet A across NPIAS airports in the contiguous United States where only one FBO sold a fuel type compared to airports at which more than one FBO sold that fuel, without controlling for other factors that might also be correlated with prices. We also calculated the average prices at airports with one FBO and airports with multiple FBOs for a subset of airports with an air traffic control tower. We examined this subset of towered-airports, as they generally have more operations, and thus more demand. As shown in table 2 below, the average price per gallon of aviation fuel was lower at airports with only one FBO than at airports with on-airport competition. For example, at airports with only one FBO, the average price posted for full-service 100LL was $5.01 per gallon, while the average price posted at airports with more than one FBO was about 73 cents higher. However, examining average differences in price fails to control for other factors that might be correlated with prices. In particular, airports that have more than one FBO are likely to be those that have higher traffic volumes and that are located in areas with larger populations and higher per-capita incomes—all factors likely correlated with higher prices. Therefore, to more fully assess the issue, we developed a statistical model that examines how fuel prices may be correlated with measures of competition when controlling for other factors, such as demand, that also may be correlated with prices. Our Statistical Model Indicates Several Factors Are Correlated with FBO Fuel Prices Our statistical model confirmed a correlation between selected cost and demand factors and FBO-posted pricing of full-service 100LL and Jet A. It also confirmed a correlation between some of the competition factors described by stakeholders and the price of aviation fuel. Our analysis included information on posted prices for both 100LL as well as Jet A. In addition to running the model for NPIAS airports in the contiguous United States for which posted prices were available (all-airports), we also ran the model for a subset of these airports that have air traffic control towers (towered-airports). See appendix II for a more detailed discussion of the model structure and findings. As we have noted, we expected fuel prices to be correlated with a variety of cost, demand, and competition factors that pertain to characteristics of airports and their locations, as well as characteristics of FBOs operating at airports. We found the following correlations: Airport Characteristics. Our model found that the size of an airport—measured as the total number of operations—was associated with higher prices for both 100LL and Jet A. The operational size of an airport is likely associated with higher demand for airport services and also is likely related to higher costs of providing those services. Specifically, we found that an increase of 10,000 airport operations per year was associated with higher prices of about 2 cents per gallon for both 100LL and Jet A in both the all-airports and towered-airports datasets. The length of the longest runway available at an airport was also correlated with higher fuel prices. The length of the runway is an indicator of the types of aircraft an airport can support. In particular, longer runways are able to accommodate larger and heavier aircraft— aircraft that generally use more fuel and thus may indicate higher demand for fuel at the airport. Specifically, we found that a 1,000-foot increase in runway length was associated with a higher price of about 7 to 8 cents per gallon for both fuels. Demographic Characteristics of Airport Location. Our analysis found that FBOs’ fuel prices were generally higher at airports in areas with higher incomes, but not always at airports in areas with larger population. We found that prices for both types of fuel were higher at airports located in counties with higher per-capita incomes. Where incomes are higher, we would expect the demand for travel to be greater. Moreover, where there are higher incomes, the cost of providing FBO services—particularly labor costs—are likely higher. We found income correlated with fuel prices for both the 100LL and Jet A in the all-airports datasets and for 100LL in the towered-only airport dataset. We also found that 100LL aviation fuel prices were higher at airports located in counties with larger populations. This was expected due to the likely greater demand for air travel in more populous areas. However, county population was not statistically significant in relation to the price of Jet A. Geographic Characteristics of Airport. Our model found that airports located in states on the East Coast tend to have higher 100LL prices. Specifically, the model suggests that 100LL prices are between 22 to 26 cents higher per gallon on average in these states. We expected FBOs operating in East Coast states to have higher 100LL prices due to higher transportation costs, as we found that there is no production of 100LL in these states. As mentioned earlier, 100LL is generally moved by truck, rail or barge due to the smaller volumes being produced—a less cost-effective means of transport than pipeline. Jet A, on the other hand, is transported by pipeline over long distances. We thus expected higher prices for 100LL at airports in these states. We found this geographic differential in all specifications for the 100LL model. Large-Chain FBOs. Our model found that both types of fuel tend to have higher posted prices at airports that have a large-chain FBO operating on the premises, regardless of whether or not there was another competitor on the premises. Specifically we found that when a large-chain FBO operates at an airport, fuel at the airport tends to be more expensive on average—on the order of 60 cents more per gallon for 100LL, and an even greater differential for Jet A, more than $1.20 per gallon. Availability of Self-Serve 100LL fuel. Our model found that when self-serve 100LL is available at an airport, the prices for full-serve 100LL tend to be lower than at airports with no self-serve 100LL available. Specifically, we found that if a self-serve 100LL option is available at an airport, the price of full-service 100LL will be about 10.5 cents per gallon lower, on average, compared to FBOs at airports without self-service 100LL. We expected a self-service option might be correlated with somewhat lower prices for full service 100LL—even if the full service option is provided by the same FBO— because pilots are presented with a lower price option may constrain the prices that FBOs will charge for a full-service option. Competition. Within our statistical model, we examined whether the extent of competition among FBOs had a correlation with fuel pricing in two ways. On-airport competition. On-airport competition occurs when two or more FBOs at an airport sell the same kind of fuel. We estimated that the price of Jet A is lower, on average, at an airport when two or more FBOs provided that fuel at an airport. Specifically, for the all-airports dataset, we found that, on average, the posted price of Jet A was 35 cents per gallon higher if only one FBO sold the fuel at an airport compared to the case when at least one additional competitor also served the airport. In the towered-airports dataset, the posted price of Jet A was about 50 cents higher on average if there were only one FBO at the airport. For 100LL, we did not find a statistical relationship between on- airport competition and prices in the all-airports dataset; however, we did find a statistical relationship between on-airport competition and prices in the towered-airports dataset. The finding of no correlation between on-airport competition and 100LL prices may be linked to the rarity of airports with more than one FBO selling 100LL in the all-airports dataset. In fact, in the all-airports dataset, only 13 percent of FBOs faced on-airport competition in the sale of 100LL while in the towered-airports dataset about one-third of FBOs faced competition in the sale of 100LL. Specifically, we estimated that the price of 100LL is 11 cents lower, on average, if there are at least two FBOs selling that fuel at a towered airport. Nearby competition. Our model also tested whether the availability of additional FBOs at airports within a 30-mile distance from a given airport had any correlation to prices for 100LL. We included this factor because many of the stakeholders we spoke to noted that general aviation pilots will consider using an airport near their preferred airport if prices were more favorable at the alternative location. However, across all model specifications, we did not find that prices for 100LL were correlated with the presence of FBOs at nearby airports. FAA’s Compliance Activities Have Not Identified FBO Pricing as a Widespread Area of Concern, and FAA Is Taking Steps to Consolidate and Review Regional Inquiries FAA officials told us they primarily rely on airports to self-certify their compliance with federal airport grant assurances when they accept AIP grant funding. This reliance includes the grant assurance that relates to FBO fees—an airport must ensure aeronautical services are available to all users on a reasonable and not unjustly discriminatory basis. FAA officials indicated that airport compliance staff conduct outreach to stakeholders and provide training aimed at ensuring that airports comply with these assurances. One recent outreach effort focused on FBO pricing. Additionally, FAA responds to phone and email inquiries and informal and formal complaints, and conducts periodic airport land use inspections, as discussed below, but none of these efforts has identified FBO pricing as a widespread area of concern. Training and Outreach. According to FAA, compliance staff conducts periodic training and outreach to the airport community on a variety of compliance issues. FAA headquarters annually conducts recurrent compliance training—which includes overseeing airport grant assurances—with regional and other FAA offices. FAA officials told us they use these sessions to address concerns brought up by regional compliance officials and airport compliance staff. One example of FAA’s outreach efforts occurred in December 2017 after AOPA raised questions about FBO pricing earlier that year. To bring clarity to the issue of FBO pricing and the role of FAA, the agency released questions and answers that emphasized: (1) FAA does not regulate FBO prices; and (2) airports are responsible for ensuring FBO prices are reasonable and applied in a non-unjustly discriminatory manner. Furthermore, FAA stated that whether an FBO’s fees are reasonable (i.e., higher than average than other FBOs) involves a number of economic, business, and other factors that vary widely from airport to airport and FBO to FBO and may include underlying costs, market conditions, quality of service, and other factors. Inquiries and Complaints. According to FAA, airport compliance staff respond to (1) phone and e-mail inquiries, (2) informal complaints, and (3) formal complaints. FAA officials told us that, while FAA does not regulate FBO prices, if someone contacts them with inquiries or a concern about a potential grant assurance violation, such as one involving FBO prices, they first refer the issue to the local airport to resolve. If the issue is not resolved, the complainant may file an informal complaint with an FAA regional office. According to FAA guidance, each FAA regional office will review the complaint and issue a letter indicating whether FAA sees a grant violation that the airport should fix or not. If the complainant is dissatisfied with the regional office’s letter, the complainant may then file a formal complaint about a violation of grant assurances with headquarters. Headquarters will then review the circumstances of the complaint and make a formal determination as to whether a grant violation occurred and work with the airport to address the violation. Data on informal and formal complaints filed with FAA headquarters and regional offices indicate FAA has not received many complaints on FBO pricing. Specifically, we reviewed informal complaint data from 2013 through 2018 from each FAA region, and found a total of 142 informal complaints about potential grant violations. Seven of these complaints related to FBO prices, and FAA found one violation later resolved by the airport by providing space for aircraft to do routine maintenance. In addition, we obtained and reviewed FAA’s responses to formal complaints from 2013 through 2018, and found that none of these formal complaint responses dealt with FBO prices. While FAA received few complaints related to FBO prices, there are limitations in relying on complaint data to understand the magnitude of an issue. For example, some pilots we spoke with stated if they have an issue with an FBO, they will use an alternative FBO rather than submit a complaint to FAA. We found that in addition to informal and formal complaints, each FAA regional office independently records inquiries about airport grant assurance issues ranging from inappropriate hanger use to noise complaints to FBO lease arrangements. Further, each region varies in the way it captures airport compliance information such as airport location, dates, and description of an inquiry or concern. For example, some regions indicate the specific grant assurance that was potentially violated while others simply describe the nature of the concern. To help see if there is a pattern of concerns across the country, FAA’s Office of Airport Compliance in headquarters has an initiative to centralize information on inquiries and concerns about grant assurances, including any that may be related to FBO prices. As envisioned, this “Enhanced Information Sharing Initiative” will provide FAA compliance staff with the ability to record and track inquires and complaints in comparable systems and should facilitate information sharing among regions and between regions and headquarters. According to FAA officials, centralizing this information will help identify issues that may be of a concern to airport users. According to FAA officials, this initiative, originally planned to be completed in August 2019, has faced delays due to a government shutdown earlier this year and information technology security difficulties. However, FAA has hired a new contractor and anticipates completion sometime in fiscal year 2020. According to an FAA compliance manager, problems that arise in the regions are brought to the attention of the airport compliance offices and discussed, and whether additional actions should be taken. Airport Land-Use Inspections. FAA is required to conduct a minimum of two airport land-use inspections per year per region, reviewing whether airports are complying with grant assurances such as airport property use requirements and lease agreements. We reviewed FAA’s annual land use inspection reports to Congress from fiscal year 2013 through 2018 and did not identify any FBO pricing concerns. Agency Comments We provided a draft of this report to DOJ and DOT for review and comment. DOJ provided technical comments, which we incorporated as appropriate. DOJ also suggested that we discuss more directly the implications that airport ownership of FBOs might have for fuel prices. We agree that airport-owned FBOs might price fuel differently than privately- owned FBOs. However, we were not able to obtain reliable data on airport ownership of FBOs. DOT did not have any comments. We are sending copies of this report to the appropriate congressional committees, the Secretary of the Department of Transportation, the Attorney General, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov If you or your staff any have questions about this report, please contact me at (202) 512-2834 or VonahA@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III. Appendix I: Airports and Fixed Base Operators GAO Interviewed Appendix II: Analysis of Factors Associated with Aviation Fuel Prices This appendix describes a model we developed to assess factors that may correlate with fixed base operator (FBO) aviation fuel prices across airports. The model uses data on posted prices for full-service 100LL aviation fuel (100LL) and Jet A (Jet A) fuel at a sample of airports in the contiguous United States that are part of the National Plan of Integrated Airport Systems (NPIAS), along with data on selected other factors that may be correlated with fuel prices. Specifically, this appendix discusses (1) the structure of the model, data sources, and variable definitions, and (2) base-case and alternative model results. Structure of Model, Data Sources, and Variable Definitions Based on our audit work as well as economic reasoning, we hypothesized that a variety of factors may be correlated with aviation fuel prices across airports. Generally, factors that influence the price of any product are the demand for the product, the cost of producing and marketing the product, and the extent of competition among those selling the product. To examine the correlation between these factors and the price of both 100LL and Jet A fuel sold by FBOs, we developed an econometric model. Specifically, our model analyzed the independent correlation of selected key factors with aviation fuel prices. We used several specifications of the model for both full-service 100LL and full-service Jet A. Each specification used airport-level data to analyze variation in the price of a single type of fuel across airports. For each type of fuel, we included only NPIAS airports within the contiguous United States for which our data on aviation fuel prices reported a price for at least one FBO. In addition, we ran the analysis not only on the full dataset of all of the airports for which we were able to obtain fuel-pricing information (which we refer to as the all-airports dataset), but also on a subset of airports limited to those with an air traffic control tower (towered-airports dataset). Dependent Variable For each type of aviation fuel, the dependent variable—or the variable to be explained in the model—is the average price of that fuel at an airport, net of state taxes. If an airport has only one FBO selling a fuel, the average price of that fuel at that airport is simply the price charged by the FBO that sells it. At an airport where two or more FBOs compete to sell the same type of fuel, the average price of the fuel is calculated as a simple (unweighted) average across all of the FBOs that sell the fuel at the airport. For 100LL, about 87 percent of airports in the all-airports dataset are served by only one FBO, and for Jet A, the share is lower, at about 84 percent. We obtained data on posted aviation fuel prices from a company that publishes such data online for two separate dates—a Wednesday in October of 2018 and a Wednesday in May of 2019. All of the fuel price data we received had been updated within 30 days of these dates. Independent Variables Independent variables in our model included a variety of demand, cost, and competitive factors that we hypothesized may explain the variation in fuel prices across airports. In particular, these factors relate to characteristics of (1) airports, (2) the locations where an airport resides, (3) the FBOs operating at a given airport, and (4) the availability of competing FBOs. Characteristics of airports. We expected certain characteristics of each airport to be related to the level of fuel prices. Airport size. We measured airport size based on the number of total operations—takeoffs and landings—at the airport. Greater activity at an airport reflects higher demand for services, which we expected to correlate with higher prices. Moreover, it is likely more costly to provide services at these busier airports. As such, based on both demand and cost factors, we expected larger airports to have higher fuel prices. We obtained data on airport operations from the Federal Aviation Administration (FAA). Length of the longest runway. Longer runways can accommodate larger and heavier aircraft, which may increase demand of such traffic. Because larger and heavier aircraft require more fuel, a longer runway may be indicative of greater demand for fuel at the airport. At the same time, longer runways are more costly to construct and maintain. Thus both demand and supply factors related to having a longer runway would suggest that fuel prices could be higher at such airports. We obtained information on runway length, which we measure in thousands of feet, from FAA. Characteristics of locations. We also expected demographic and geographic characteristics of the location of each airport to be correlated with fuel prices. Demographic characteristics of the population living in the area near an airport. Personal income per capita. Areas where per-capita incomes are higher could signal a greater demand for air travel and airport services. At the same time, areas with higher per-capita incomes also suggest that costs for labor and other resources the FBO will need to procure will be higher. Thus, we hypothesize that airports located in counties with higher per-capita incomes will have higher fuel prices. We obtained data on personal income per capita by county from the Bureau of Economic Analysis, Department of Commerce. Square of per-capita income. We also expected that, as income levels rise, the effect of even higher levels of income on fuel prices will attenuate. To account for the possibility of a nonlinear relationship between income and fuel prices, we included a variable equal to the square of personal income per capita. Population. A larger population in the area surrounding an airport would likely indicate higher demand for airport services. We obtained population data by county from the Bureau of Economic Analysis, Department of Commerce. Distance from Source of 100LL aviation fuel production. Following production, 100LL is typically shipped over longer distances by truck, rail, or barge, while Jet A tends to be transported over longer distances by pipeline. As such, long-haul transport is relatively more costly for 100LL. We found that there is no production of 100LL in East Coast states, while most other states in the contiguous United States have production sources for 100LL in closer proximity. Therefore, we controlled for the greater cost of transporting 100LL to states along the East Coast with a dummy variable in the 100LL pricing model. We obtained information on production sources for 100LL from the Energy Information Administration, Department of Energy. Characteristics of FBOs. We included two variables in the model that relate to the services provided by FBOs at the airport Large-Chain FBOs. Based on our audit work, we hypothesized that large-chain FBOs—those with operations at numerous airports—are more likely to focus their business model on meeting the demands of pilots looking for a suite of services and amenities. We thus expected that an airport served by a large-chain FBO may have higher average fuel prices due to the costs of providing such services. We used the data on aviation fuel prices to determine the number of operations run by each FBO. For purposes of the model, we defined an FBO as a large-chain if the owner had at least 25 FBO operations across airports reported in our dataset. Availability of self-service fuel at airport. We hypothesized that the price for full-service 100LL might be lower at an airport where a self- service 100LL is also offered for sale. That is, the ready availability of a cheaper fueling option may influence the pricing of full-service 100LL. Therefore, we included a dummy variable in the 100LL pricing model if self-service 100LL was also available at the airport. In many cases, only one FBO is available at an airport and provides both self- service and full-service 100LL. The variable is derived from the data on aviation fuel prices. Degree of competition among FBOs. Economic theory suggests that market prices for a product will be lower when more firms are selling a product, all else equal. We examined “on-airport” competition among FBOs for both fuels, and for 100LL, we also developed a variable to account for competition at nearby airports. The number of on-airport FBOs selling a given fuel. The most immediate and likely relevant competition among FBOs would occur at a given airport. To examine the correlation between on-airport competition and aviation fuel prices, we used two alternative measures: (1) the number of FBOs selling the fuel at each airport and (2) a dummy variable that equals 1 for airports where more than one FBO sells the fuel and 0 otherwise. These competition measures were derived from the data on aviation fuel prices. Availability of alternative FBOs at airports in the vicinity. Because stakeholders we interviewed said that pilots using 100LL may consider using nearby airports where that fuel is less expensive rather than their intended destination airport, we examined whether the availability of FBO services at nearby airports correlated with 100LL prices. Specifically, we counted the number of different FBOs selling 100LL at airports within a 30-mile radius of each airport where 100LL is sold. We derived this measure of competition from nearby airports by combining geospatial data for each airport with information from our data on aviation fuel prices. Base-Case and Alternative Model Results As noted, we ran the fuel-pricing model for both 100LL and Jet A aviation fuels. Table 4 provides descriptive statistics for all of the variables included in the models. We report regression results for several specifications in tables 5–9. Specifically these tables provide the extent and direction (plus or minus) of the estimated correlation of each of the independent variables on aviation fuel prices. We also indicate whether each estimated correlation is statistically different from zero. The per-gallon price of aviation fuel (100LL and Jet A)—the dependent variable in our model—is measured in dollars and cents. Some of the independent variables are measured in levels—for example, annual airport operations are measured in tens of thousands, and the length of the longest runway in thousands of feet. For these variables, the regression model results indicate the estimated correlation of a one-unit increase in the level of the independent variable on the price of aviation fuel. For example, as shown in table 4, an increase in runway length of 1,000 feet is associated with an increase in the price of both 100LL and Jet A of about 8 cents, and this estimated correlation is statistically different from zero at the 1 percent level. The model also includes some “dummy” variables—variables that take a value of either 1 or 0, depending on whether a specific attribute does or does not apply. For a dummy variable, the estimated correlation is interpreted as the effect of the attribute on the per-gallon fuel price. Based on the findings in table 5, being located on the East Coast is associated with an increase in the price per gallon of 100LL fuel of about 22 cents. This correlation was also found to be statistically different from zero. In another example, the model specification shown on table 5 uses a dummy variable to indicate the presence of competition at an airport—the variable equals 1 for airports that are served by more than one FBO and 0 for airports that are served by only one FBO. Results in table 5 indicate that the price per gallon of Jet A fuel is about 35 cents lower at airports that are served by more than one FBO than at airports with only one FBO. Appendix III: GAO Contact and Staff Acknowledgments GAO Contact Staff Acknowledgments: In addition to the individual named above, Cathy Cowell (Assistant Director); Nick Nadarski (Analyst-in-Charge); Amy Abramowitz; Dave Hooper; Christopher Jones; Ned Malone; Malika Rice; Ardith Spence; and Michelle Weathers; made key contributions to this report.


Background BMI is used as a screening tool for obesity. An individual with a BMI of 30 or higher is considered to have obesity. Over the past two decades, both the prevalence of obesity and estimates of the medical spending associated with individuals with obesity have increased. For example, a 2018 study estimated that the percentage of national medical expenditures used to treat obesity-related illnesses in adults increased from 6.13 percent in 2001 to 7.91 percent in 2015, a 29 percent increase. This study also found that the high medical costs of obesity are due to extremely high medical costs among a small percentage of the population who have severe obesity (those with a BMI of 40 or higher). In addition, a 2017 study found that medical expenditures rise most rapidly for individuals with a BMI of 40 or higher. One option for the treatment of obesity is the use of prescription obesity drugs. As of June 2019, there were nine prescription drugs approved by FDA to treat obesity. Four obesity drugs—benzphetamine, diethylpropion, phendimetrazine, and phentermine—were approved by FDA in 1961 or earlier for short-term use, which is generally about 12 weeks, and are available as generic drugs. The remaining five obesity drugs were approved by FDA in 1999 or later for long-term use and are available as brand-name drugs— bupropion/naltrexone (Contrave), liraglutide (Saxenda), lorcaserin (Belviq), orlistat (Xenical), and phentermine/topiramate (Qsymia). Each of these five brand-name obesity drugs underwent one or more randomized, controlled clinical trials for safety and efficacy prior to FDA approval of the drug—a total of 15 clinical trials across the five drugs. Obesity drugs work in different ways; some may help an individual feel full sooner or less hungry, while others may reduce fat absorption in the body. Results vary by medication and by person, but, according to the National Institutes of Health, on average, people who take obesity drugs as part of a lifestyle program lose between 3 and 9 percent more of their starting body weight than people in a lifestyle program who do not take obesity drugs. As with other prescription drugs, obesity drugs may have side effects such as headache, dizziness, dry mouth, nausea, and diarrhea. And, as with other prescription drugs, health care providers may prescribe an obesity drug for off-label use— that is, for a different medical condition, in a different dosage, or for a different duration than for which the drug is FDA approved. Obesity drugs should be used as an adjunct to lifestyle therapy (e.g., diet, physical activity, and behavioral counseling), according to guidelines from several medical associations. According to these guidelines, the use of obesity drugs is indicated for individuals with a BMI of 27 or higher with one or more obesity comorbidities (such as type 2 diabetes), or individuals with a BMI of 30 or higher who have a history of failure to achieve clinically meaningful weight loss (that is, weight loss of 5 percent or more) or who are unable to sustain weight loss. In addition, the guidelines recommend evaluating the patient’s weight loss after about 12 to 16 weeks of treatment with an obesity drug and discontinuing the drug if the patient has not lost a certain amount (e.g., at least 5 percent) of their initial body weight. Although obesity is classified as a disease, some health care providers, including those who specialize in the care of patients with obesity, continue to stigmatize patients with obesity. For example, a 2018 study reported that health care providers may perceive patients with obesity as being less compliant and having less self-discipline than other patients. Additionally, health care providers may not initiate discussions about weight loss with patients because of lack of time, other important issues or concerns, a belief that a patient is not motivated or interested in losing weight, or concern over a patient’s emotional state, according to another 2018 study. The Prevalence of Obesity Was Close to 40 Percent among All U.S. Adults from 2013 through 2016 The prevalence of obesity was about 38 percent among all U.S. adults (about four of every 10 adults) from 2013 through 2016, according to nationally representative estimates from CDC. The estimate of prevalence among adults covered by Medicare was about 40 percent, and among those with Medicaid or other public health insurance (excluding Medicare) it was about 42 percent. In addition, the prevalence of obesity among adults with private health insurance coverage and among the uninsured was similar, at about 37 percent and 38 percent, respectively. These national estimates also showed that about 24 percent of Medicare beneficiaries had Class 1 obesity, about 10 percent had Class 2 obesity, and about 6 percent had Class 3, or severe, obesity. (See fig. 1.) According to CDC estimates, adults age 18 to 64 and adults age 65 and older had a similar prevalence of obesity, about 39 percent and 38 percent, respectively. However, a higher percentage of adults age 18 to 64 than adults age 65 and older had Class 3 obesity. (See table 1.) Appendix III provides additional information on the prevalence of obesity among adults, as well as on the prevalence of adults who were overweight, which is defined as a BMI of 25 to <30, including 95 percent confidence intervals. Few Adults Used Obesity Drugs and Limited Data Are Available on Individuals Who Have Used These Drugs Relatively few U.S. adults, including adults with obesity and adults who reported trying to lose weight, used obesity drugs from 2012 through 2016, according to nationally representative estimates. Guidelines suggest prescribing obesity drugs as an adjunct to other diet and lifestyle changes, or when other approaches have not resulted in clinically significant weight loss. Those health care providers who prescribe obesity drugs consider several factors, such as whether there are any contraindications of the obesity drug for their patients and the cost of the drug. Some limited data are available on individuals who have used obesity drugs, including data on whether these individuals adhered to taking the prescribed obesity drug or maintained their weight loss over time. Relatively Few Adults Used Obesity Drugs Available data indicate that relatively few U.S. adults, including those with obesity, used obesity drugs. Specifically, of the estimated 233 million U.S. adults, fewer than a million used any of the nine obesity drugs, according to AHRQ’s nationally representative estimates from MEPS data for 2012 through 2016. Of the estimated 71.6 million U.S. adults with obesity, an estimated 660,000 per year, on average, used an obesity drug, according to these data. Similarly, among those who reported trying to lose weight, relatively few of them (about 3 percent) reported that they took prescription medication for weight loss, according to CDC’s nationally representative estimates from NHANES for 2013 through 2016. Additionally, six of the studies we reviewed examined this topic and found that few U.S. adults have used obesity drugs. For example, one study reported that in 2011, 2,554 obesity drug prescriptions were filled per 100,000 people, with about 87 percent of those prescriptions for phentermine, a generic obesity drug. Three other studies assessed the use of obesity drugs among veterans receiving care from the Veterans Health Administration and similarly found that few patients were prescribed obesity drugs. One of these studies found that about 1 percent of the 153,939 veterans who enrolled in the MOVE! Weight Management Program from 2013 through 2016 were prescribed an obesity drug (orlistat, phentermine, phentermine/topiramate, liraglutide, or bupropion/naltrexone) within 1 year of MOVE! initiation. Physicians May Have Concerns About Prescribing Obesity Drugs; Those Who Do Prescribe These Drugs Consider Multiple Factors According to officials from groups representing physicians and advocacy groups we interviewed, and seven studies we reviewed, some physicians and other health care providers may not be open to or comfortable with prescribing obesity drugs. For example, providers may not perceive obesity drugs to be safe or effective. According to officials from one advocacy and research group, concerns about the safety of obesity drugs may be related to the adverse consequences associated with past obesity drugs. In addition, one medical association we contacted indicated physicians consider clinical preventive service recommendations from the U.S. Preventive Services Task Force on the use of obesity drugs. The task force recommends that clinicians offer or refer adults with a BMI of 30 or higher to intensive, multicomponent behavioral interventions. Further, a systematic review of evidence of the benefits and harms of behavioral therapy and use of obesity drugs conducted for the task force found that obesity drugs, but not behavior-based interventions, were associated with higher rates of harm. The potential for harm (i.e., adverse events) may discourage physicians and other health care providers from prescribing these drugs. In addition, officials we interviewed and the studies we reviewed noted that a lack of insurance coverage, high out-of-pocket costs, and the patient’s means to afford obesity drugs may also discourage physicians from prescribing obesity drugs. The officials and studies also noted that physicians might have gaps in knowledge about obesity drugs. For example, officials from one medical association noted that lack of education is a barrier to physicians in prescribing obesity drugs for patients who would be candidates for them, and officials from another medical association said that many clinicians are not aware that there are FDA-approved drugs for obesity, and therefore they do not think about prescribing them. One study we reviewed found that, of the 111 primary care providers responding to a survey, most reported limited experience with obesity drugs as a barrier to prescribing them. While guidelines on the use of obesity drugs suggest prescribing obesity drugs as an adjunct to other diet and lifestyle changes, or when other approaches have not resulted in clinically significant weight loss, physicians and other health care providers may not understand the recommendations outlined in the guidelines. For example, one study found that many of the health care providers responding to a survey reported responses inconsistent with the guideline-recommended thresholds to initiate and continue use of obesity drugs. Physicians and health care providers who do prescribe obesity drugs take several factors into consideration. Specifically, before prescribing an obesity drug, these providers consider the likely benefits of weight loss, the drug’s possible side effects, the patient’s current health issues and other medications, family medical history, and the cost of the drug, according to the National Institutes of Health. According to officials from an advocacy group, specific considerations include (1) the patient’s other health conditions that may increase the risk from using a particular obesity drug (contraindications); (2) the ability of an obesity drug to treat both the patient’s obesity and other health conditions; (3) the patient’s ability to afford a particular obesity drug, given their insurance coverage and other financial resources; (4) patient preference regarding the dosage and form of the drug; and (5) the average efficacy (weight loss) of an obesity drug. Further, when treating obesity, providers use the least invasive treatments, such as lifestyle-based therapies first, then escalate to obesity drugs if noninvasive treatments prove ineffective, according to officials from the same advocacy group. Some Limited Data Are Available on Individuals Who Have Used Obesity Drugs Some limited data are available on individuals who have used obesity drugs, including data on the distribution of BMI, the use of obesity drugs in conjunction with other items or services, whether these individuals adhered to using the prescribed obesity drug or maintained their weight loss over time, and the impact that using obesity drugs has on other medical services directly related to obesity. The following is a summary of available information on specific aspects of individuals who have used obesity drugs. Distribution of BMI across individuals who have used obesity drugs. CDC’s nationally representative estimates for 2013 through 2016 found that the BMI of adults who reported that they used obesity drugs ranged from 21 to 64, with a median BMI of 34. However, these data are limited because they do not indicate how long the individual used the drugs before their BMI was measured. Use of obesity drugs in conjunction with other items or services. Two studies we reviewed examined the use of obesity drugs in conjunction with other items or services. These studies found that participants who used an obesity drug in conjunction with other services, such as behavioral counseling, lost more weight than those who did not take the drug with the other services. For example, in one 2019 study, participants who received intensive behavioral therapy combined with an obesity drug, liraglutide, had nearly double the weight loss (an average of about 12 percent of their body weight) compared to the participants who received only intensive behavioral therapy (an average of about 6 percent of their body weight). In addition, the 15 clinical trials for the brand-name obesity drugs that we reviewed generally found that a significantly higher percentage of participants who used the obesity drug combined with other items or services (such as a low-calorie diet or increased physical activity) achieved 5 percent or more weight loss compared to participants who used a placebo with the other items or services. One clinical trial that used an intensive behavior modification program (28 group sessions) found higher average weight loss (9 percent loss of initial body weight) for participants who used the obesity drug (bupropion/naltrexone) than for the placebo group. This clinical trial also found that the placebo group with the intensive behavior modification had higher weight loss than placebo groups in the other clinical trials, none of which used intensive behavioral therapy. Adherence to using the prescribed obesity drug. FDA’s analysis of Sentinel System data of obesity drugs dispensed in 2008 through 2017 found that in the majority of patients using obesity drugs, cumulative treatment duration was 90 days or less. FDA analyzed data for 267,836 new users of obesity drugs and found that about 58 percent of patients who used any of the obesity drugs did so for 90 days or less; about 31 percent used any of the obesity drugs for 30 or fewer days. The average duration for the first use of any of the nine obesity drugs was 69 days. (See appendix V for more data from FDA’s analysis.) FDA’s findings are consistent with the findings of two of the three studies that we reviewed that measured adherence to using the prescribed obesity drug. These studies reported that use of obesity drugs dropped significantly after 30 days. For example, one 2018 study that reviewed 1 year of data on 26,522 patients who had new prescription drug claims for one of four obesity drugs (liraglutide, lorcaserin, bupropion/naltrexone, and phentermine/topiramate) found that adherence to using any of the four obesity drugs dropped markedly during the first month following the initial claim for the drug. In addition, while the 15 clinical trials we reviewed were not designed to measure adherence to taking obesity drugs, they provide some information on whether or not study participants adhered to using these drugs during the trials. Participant dropout rates for these clinical trials ranged from 14 percent to 66 percent for the obesity drug treatment and the placebo groups, which could indicate difficulty in adherence to the study regimen; however, participants using the placebo generally had higher dropout rates than those using the obesity drug. The reasons for discontinuation among study participants in the clinical trials included side effects, such as headaches and nausea; being unavailable for follow up; and withdrawal of consent. Maintaining weight loss over time by individuals who have used obesity drugs. The recent systematic review conducted for the U.S. Preventive Services Task Force noted that data on long-term weight loss with obesity drugs are limited. The review found that individuals using obesity drugs were more likely to maintain their weight loss over 12 to 36 months compared with placebo, but noted that the evidence was limited by the small number of trials for each medication, poor follow up with participants, and limited applicability (given that participants had to meet narrowly defined inclusion criteria), among other limitations. We also identified six studies—each of which reviewed one of the FDA-approved obesity drugs—that examined weight loss maintenance, generally after about 1 year. For example, a 2018 study for one obesity drug (lorcaserin) found that while the obesity drug initially improved upon weight loss achieved with weight loss maintenance counseling, this advantage was not maintained at 1 year. That is, after 1 year, there was no significant difference in weight loss maintenance between the participants treated with the obesity drug along with counseling, compared to those treated with placebo along with counseling. Another study that examined clinical trial data for one obesity drug (bupropion/naltrexone) concluded that participants who lost at least 5 percent of their body weight after 16 weeks were likely to maintain clinically significant weight loss (of at least 5 percent) after 1 year of treatment with the drug. The impact of using obesity drugs on medical services directly related to obesity. We did not identify any studies on the impact that the use of obesity drugs had on the utilization of medical services directly related to obesity. In terms of studies on the impact on health outcomes, the systematic review conducted for the U.S. Preventive Services Task Force concluded that health outcomes data for individuals receiving treatment with obesity drugs were limited. The review reported that clinical trials of obesity drugs for weight loss examined few outcomes beyond quality of life measures, and that none of the drug-based maintenance trials reported the effects of the obesity drug interventions on health outcomes. The review noted that the trials included in the review were of highly selected populations with multiple exclusions relevant to health outcomes (e.g., history of serious medical conditions). The review further noted that while it appears that weight loss interventions, including obesity drugs, can reduce diabetes incidence, larger studies with longer-term follow up are required to understand the full benefits of these interventions on health outcomes and whether those effects are long lasting. Health Insurance Coverage for Obesity Drugs Is Limited and Varied across Types of Insurance Health insurance coverage for obesity drugs is limited—that is, not all public and private health insurance provided coverage for obesity drugs or may have additional requirements to determine these drugs are medically necessary. Medicare Part D plans may opt to cover obesity drugs, and state Medicaid programs or Medicaid managed care plans within states may choose either to cover or exclude obesity drugs from coverage. We found that both Medicare Part D and Medicaid reimbursed for a relatively small number of prescriptions for obesity drugs in 2016 and 2017. For private health insurance—which includes employer- sponsored health insurance, individually purchased health plans, and FEHBP plans—we found that coverage varied and, when obesity drugs were covered, the coverage could have additional requirements such as prior authorization or determination that a drug is medically necessary for the patient. Medicare. Under Medicare’s prescription drug benefit, Medicare Part D plans may choose to cover obesity drugs—in these cases, obesity drugs are considered supplemental drugs under an enhanced alternative coverage plan. Medicare beneficiaries who select a Part D plan that offers supplemental benefits, which may include coverage of excluded drugs such as obesity drugs, must pay the full premium cost for those additional benefits (i.e., Medicare does not subsidize them). Medicare Part D plans can choose whether or not to offer enhanced alternative coverage, and not all Medicare Part D plans that provide enhanced alternative coverage cover obesity drugs as supplemental drugs. For example: Roughly half of the Medicare beneficiaries covered by one large insurer’s Medicare Part D plans in one state have coverage for obesity drugs as a supplemental drug under enhanced alternative coverage, according to officials from that insurer. Officials at another large insurer told us that their Medicare Part D plans have historically covered supplemental drugs based on consumer demand, and obesity drugs do not typically meet their threshold for offering supplemental coverage. The officials noted that their plans have limited funds to cover supplemental drugs and that consumer demand is typically highest for other types of drugs, such as drugs to treat erectile dysfunction. Enhanced Alternative Coverage and Supplemental Drugs under Medicare Enhanced alternative coverage is alternative prescription drug coverage under Medicare Part D with value exceeding that of Medicare Part D’s defined standard coverage. Enhanced alternative coverage may include basic prescription coverage and supplemental benefits such as supplemental drugs. Supplemental drugs are drugs—including drugs for weight loss—that would be covered Part D drugs but for the fact that they are specifically excluded as Part D drugs under Medicare Part D’s basic prescription drug coverage. Medicare Part D plans may offer these excluded drugs, such as obesity drugs, as a supplemental drug under enhanced alternative coverage. A Medicare Part D plan can choose which drugs it covers as a supplemental drug under enhanced alternative coverage—that is, not all plans cover the same supplemental drugs as part of enhanced alternative coverage. Data from CMS on Medicare Part D reimbursement for obesity drugs provide some insight on coverage. For example, our analysis found that in 2017, 27 Medicare Part D plans reimbursed for obesity drugs under enhanced alternative coverage for 209 Medicare beneficiaries. (See table 2 for 2016 and 2017 data.) See appendix VI for more information. Medicaid. State Medicaid programs or Medicaid managed care plans within states may choose either to cover or exclude obesity drugs from coverage. Our analysis found that in 2017, Medicaid programs or Medicaid managed care plans in 41 states reimbursed pharmacies and other providers for at least one claim for an obesity drug, for a total of 30,800 prescriptions. (See table 3 for 2016 and 2017 data.) Medicaid managed care organizations may provide coverage of obesity drugs not covered by the state plan, according to CMS. See appendix VII for more information. Employer-sponsored and individually purchased health plans. Coverage of the nine obesity drugs varied in employer-sponsored and individually purchased health plans, according to the insurers and pharmacy benefit managers we interviewed. For example: Officials from one large insurer told us that coverage of obesity drugs is included in plans for about 90 percent of their members; only a small percentage of members do not have plans with this coverage. Officials from another large insurer surveyed its health plans in different geographic locations and found that, of those that responded, four of the six employer-sponsored and three of the six individually purchased health plans covered the nine obesity drugs. They said that many of the plans that covered obesity drugs in their employer- sponsored markets also covered these drugs in their individual market. Officials at a large pharmacy benefit manager said employers that provide employer-sponsored health insurance can choose to customize their formulary and decide whether to include obesity drugs. They said their select and premium prescription drug formularies include obesity drugs, so companies that decide to offer those formularies would cover obesity drugs, but many companies choose to customize their formularies and may not include obesity drugs. Even if employer-sponsored and individually purchased health plans offer coverage of obesity drugs, these plans often put requirements in place to determine a beneficiary’s eligibility for coverage of obesity drugs, according to officials from insurers and pharmacy benefit managers we interviewed. For example, plans may require beneficiaries to obtain prior authorization, require a determination of medical necessity of the drug for the patient, and review the drug’s effectiveness prior to making a coverage decision. For example, an official from one large insurer told us their drug formulary does not include obesity drugs because the clinical evidence indicates that other therapies are more effective for weight loss. However, this official also said that some of its plans would cover obesity drugs as a nonformulary option if a physician or other health care provider indicates that the obesity drug is medically necessary (e.g., after a patient has tried other treatment options, such as behavioral therapy). Further, if a patient is offered coverage of an obesity drug but fails to receive a clinical benefit within a specified time frame, insurers and pharmacy benefit managers told us the following: A patient and his or her physician may decide together whether the patient should continue or discontinue the obesity drug, and plans often defer to physicians to determine whether an obesity drug is medically necessary for a patient. Some plans may require additional information from a patient’s physician every 6 to 12 months for reapproval of coverage of an obesity drug, such as reporting outcomes (e.g., weight loss) while using the drug. Plans could require prior authorization to continue using an obesity drug. An individual may be able to try a different obesity drug covered by the formulary. For the largest employer-sponsored health care program in the United States—FEHBP, managed by the Office of Personnel Management—we found that some FEHBP plans offered by large insurers excluded obesity drugs from coverage. We examined the formularies for 12 plans offered by three large FEHBP insurers and found that the formularies for two plans from one insurer indicated some type of coverage of obesity drugs in 2018. One plan offered coverage for 50 percent of the plan’s allowed amount for weight management drugs, and the other plan offered coverage of two obesity drugs as tier 2 drugs, which have higher copayments than tier 1 drugs. For individually purchased health plans offered on health care exchanges, nine of the 34 states with federally facilitated exchanges had at least one plan in the silver tier of coverage that included some type of coverage for obesity drugs in 2018, according to a 2018 study. The study found that covered obesity drugs were generally the older drugs and that the newer drugs tended to be covered with higher copayments or more likely to require prior authorizations than other medications. Two-Thirds of Obesity Drug Payments Were Made Out of Pocket; Adults Who Used Obesity Drugs Had Higher Average Estimated Medical Spending Out-of-pocket payments from the patient or patient’s family made up two- thirds of the amounts paid for obesity drugs, according to nationally representative estimates for 2012 through 2016. These amounts could include insurance copayments and deductible amounts, and payments for obesity drugs not covered by insurance. Private health insurance paid about one quarter of the amount paid for obesity drugs, and Medicare and other public health insurance paid the remainder. Average annual medical spending and prescription drug spending were higher for adults who used any of the nine obesity drugs than for those who did not, according to these estimates. However, the differences in these estimates do not establish any causal relationship between using obesity drugs and having higher average annual medical or prescription drug spending. Two-Thirds of Obesity Drug Payments Were Paid Out of Pocket by Patients; Phentermine Was Most Purchased Out-of-pocket payments made up about two-thirds of total amounts paid for obesity drugs for U.S. adults and private health insurance paid a quarter, according to AHRQ’s nationally representative estimates from MEPS data for 2012 through 2016. Medicare, Medicaid, and other public health insurance paid the remainder; however, estimates for each of these sources of payment are imprecise. (See fig. 2.) Similar to studies on the use of obesity drugs, AHRQ’s estimates also found that 80 percent of amounts paid for any of the nine obesity drugs was for one obesity drug, phentermine, which is available as a generic drug. We also examined available spending data from CMS on payments for obesity drugs and found the following: Medicare Part D prescription drug plans spent $19,714 for obesity drugs in 2016 and $140,296 in 2017, according to our analysis of CMS’s Prescription Drug Event data. These amounts include Medicare Part D plan reimbursements for any of the nine obesity drugs under enhanced alternative coverage. CMS’s data also showed that total beneficiary spending—that is, the total amount Medicare beneficiaries paid out of pocket as copayments or deductibles—for any of these prescriptions totaled $4,048 in 2016 and $5,376 in 2017. See appendix VI for more information. Total Medicaid state and federal spending—that is, reimbursement amounts for the nine obesity drugs—was at least $5,017,424 in 2016 and $7,453,442 in 2017, according to our analysis of available data from CMS’s Medicaid State Drug Utilization data. These amounts do not include all Medicaid spending for obesity drugs under Medicaid managed care. For example, if a Medicaid program pays a managed care organization for drugs as part of their capitated payment for all Medicaid services, they are not reimbursed on a per-drug basis, and obesity drugs covered by Medicaid in that state would show up as a $0 reimbursement amount in CMS’s Medicaid State Drug Utilization data. According to CMS data, Medicaid spending for obesity drugs was the greatest in California in 2016 and 2017. See appendix VII for more information. In addition, when the number of prescriptions dispensed are counted, FDA’s estimates from 2017 IQVIATM data—which are projected nationally from prescriptions dispensed in about 59,900 outpatient retail pharmacies—found that most prescriptions dispensed for obesity drugs were paid for by private insurance. FDA’s analysis found that almost 64 percent of prescriptions dispensed for any of the nine obesity drugs was paid for by private health insurance, and 35 percent of prescriptions dispensed was paid for by cash (i.e., out-of-pocket) payments paid for by the patient or their family in 2017. The remaining 1 percent of prescriptions dispensed for obesity drugs was paid for by Medicare Part D and Medicaid at an estimated 0.9 percent and 0.1 percent, respectively. Adults Age 18 to 64 Who Used Obesity Drugs Had Higher Average Medical and Prescription Drug Spending Than Those Who Did Not For all U.S. adults age 18 to 64, the estimated average annual medical and prescription drug spending per adult was higher for those who used an obesity drug than for those who did not use an obesity drug. Specifically, the estimated average annual medical expenditures were $7,575 per adult who used an obesity drug and $4,302 for those who did not, according to AHRQ’s nationally representative estimates from MEPS data for 2012 through 2016. Further, the estimated average annual prescription drug expenditures per adult were $2,198 for those who used an obesity drug and $1,111 for those who did not. However, these data do not necessarily indicate that use of obesity drugs leads to higher average annual medical and prescription drug spending. For U.S. adults with obesity, there was not a significant difference between the estimated average annual medical and prescription drug expenditures per adult for those who used an obesity drug and those who did not use an obesity drug. This may be due to the small sample size of 279 adults with obesity who used an obesity drug in the MEPS data. Appendix VIII provides more information on AHRQ’s estimated expenditures for obesity drugs and other medical and prescription drug spending. We did not identify any studies other than AHRQ’s estimates from MEPS data that specifically addressed the medical spending for adults who used obesity drugs compared to those who did not. Agency Comments We provided a draft of this report to HHS for review and comment. HHS provided technical comments, which we incorporated as appropriate. We are sending copies of this report to the Secretary of Health and Human Services, appropriate congressional committees, and other interested parties. In addition, the report will be available at no charge on the GAO Web site at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-7114 or dickenj@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs are on the last page of this report. GAO staff who made major contributions to this report are listed in appendix IX. Appendix I: Objectives, Scope, and Methodology The Bipartisan Budget Act of 2018 included a provision for GAO to review the prevalence of obesity and the use of obesity drugs in the Medicare and non-Medicare populations, including spending for and coverage of these drugs. We examined (1) the prevalence of obesity among adults in the United States; (2) what is known about the use of obesity drugs and the individuals who use them; (3) what is known about health insurance coverage of obesity drugs; and (4) what is known about spending on obesity drugs and about medical spending for adults who used obesity drugs compared to those who did not. To address our reporting objectives, we examined estimates from federal agencies within the Department of Health and Human Services (HHS), including the Centers for Disease Control and Prevention’s (CDC) estimates from the National Health and Nutrition Examination Survey (NHANES), the Agency for Health Care Research and Quality’s (AHRQ) estimates from the Medical Expenditure Panel Survey (MEPS), and the Food and Drug Administration’s (FDA) estimates from IQVIA and the Sentinel System. We also analyzed Medicare Part D Prescription Drug Event data and Medicaid State Drug Utilization data from the Centers for Medicare & Medicaid Services (CMS). For each data source, we examined the latest available data at the time of our review. In addition, we conducted a literature review; interviewed officials and reviewed documents from stakeholder organizations, federal agencies, insurers, and others; and examined relevant laws and regulations. National Health and Nutrition Examination Survey We examined CDC’s nationally representative estimates from NHANES of the prevalence of obesity among U.S. adults and use of obesity drugs. NHANES is a cross-sectional survey designed to monitor the health and nutritional status of the civilian, noninstitutionalized U.S. population. The survey consists of interviews conducted in participants’ homes and standardized physical examinations, including measured height and weight, conducted in mobile examination centers. CDC analyzed data from two 2-year cycles of NHANES (2013 through 2014 and 2015 through 2016) for the prevalence of obesity [defined as a body mass index (BMI) of 30 or higher] for all adults by age (18 and older, 18 through 64, and 65 and older), health insurance coverage, and class of obesity. The insurance categories were mutually exclusive: (1) Medicare, which includes all adults who reported having Medicare, regardless of whether they reporting having another type of health insurance (e.g., private health insurance) in addition to Medicare; (2) private health insurance (excluding individuals with Medicare); (3) Medicaid/public health insurance (excluding Medicare); and (4) uninsured. We also examined CDC’s estimates from NHANES on the prevalence of overweight (defined as a BMI of 25 to <30) among U.S. adults. In addition, we examined CDC’s estimates from NHANES for 2013 through 2016 on adults who took prescription medications for weight loss. NHANES asks participants if they tried to lose weight, and, for those who did, if they took diet pills prescribed by a doctor. CDC’s estimates included the lower and upper bounds of the 95 percent confidence intervals (the interval that would contain the actual population value for 95 percent of the samples NHANES could have drawn). Medical Expenditure Panel Survey We examined AHRQ’s nationally representative estimates from MEPS data on the use of and payment sources for obesity drugs. MEPS collects nationally representative data on health care use, expenditures, sources of payment, and insurance coverage for the U.S. civilian, noninstitutionalized population. For this analysis, AHRQ estimated the distribution of payments for obesity drugs using MEPS pooled data for years 2012 through 2016. We also examined AHRQ’s estimates from MEPS of annual expenditures for medical care and all prescription drugs—for those individuals who used obesity drugs and those who did not—and annual expenditures for obesity drugs. AHRQ’s estimates included the lower and upper bounds of the 95 percent confidence intervals. We examined FDA’s nationally projected data on the prescriptions dispensed for obesity drugs from outpatient retail pharmacies using 2017 IQVIA™ National Prescription Audit Extended Insights and IQVIA™ Total Patient Tracker. IQVIA™ is proprietary data that includes data for prescriptions dispensed at approximately 59,900 U.S. outpatient retail pharmacies. FDA analyzed IQVIA data and provided aggregated results for the nationally estimated number of prescriptions dispensed for the nine obesity drugs from U.S. outpatient retail pharmacies, by payment method. These patterns may not apply to other settings of care (e.g., mail-order or specialty pharmacies or clinics). In addition, the analysis captures data when a prescription was dispensed; it does not indicate that the patient took the obesity drug, and it does not indicate if the drug was prescribed off label for something other than weight loss. Sentinel System We examined FDA’s national estimates of prescriptions for obesity drugs dispensed by outpatient pharmacies for new users of obesity drugs (by number of days supplied and by age and gender of patient) from the agency’s Sentinel System. FDA’s Sentinel System uses prescription drug dispensing data from populations with federal or commercial insurance to characterize drug utilization of a large U.S. population with private and public health insurance. FDA examined drug dispensing data from January 1, 2008, through December 31, 2017, from 17 of 18 Sentinel data partners, including Medicare, which contributed fee-for- service enrollee data. FDA analyzed dispensings for 267,836 new users of the nine prescription obesity drugs. FDA estimated the duration of the first treatment episode (in days) for patients’ prescription dispensings for any of the nine obesity drugs using a 14-day episode gap—that is, if there were more than 14 days between exhausting the previous dispensing’s days supplied for that prescription and refilling the prescription, then FDA counted it as a new treatment episode. FDA estimated cumulative treatment duration by summing days’ supply of all dispensings of an obesity drug during a patient’s presence in the database, without regard to time between dispensings. Medicare Part D Prescription Drug Event Data For information on the number of claims for obesity drugs that were reimbursed, the number of plans that provided reimbursement, and the amount reimbursed for obesity drugs under the Medicare prescription drug program known as Medicare Part D, we analyzed Medicare Prescription Drug Event data from CMS for 2016 and 2017. We analyzed Medicare Part D plan reimbursements (payments to pharmacies) and beneficiary spending (the total amount Medicare beneficiaries paid out of pocket as copayments or deductibles) for the nine obesity drugs for claims that CMS’s data coded as reimbursed as a supplemental drug under enhanced alternative coverage. We excluded 1,787 claims in 2016 and 1,775 claims in 2017 for one obesity drug, orlistat (Xenical), that were listed in CMS’s data as covered under Medicare Part D (and were not coded as a supplemental drug under enhanced alternative coverage). According to CMS officials, orlistat has off-label indications including diabetes and hyperlipidemia, and when orlistat is used for these indications the drug would be covered under Medicare Part D, and the Medicare Part D plan is responsible for ensuring it is dispensed appropriately per Medicare Part D policy. We also excluded 25 claims in 2016 and 26 claims in 2017 for prescription obesity drugs listed as over-the-counter in the prescription drug event data because, according to CMS, these appear to be outliers. Because our analysis was limited to those instances in which a Medicare Part D plan reimbursed for an obesity drug as a supplemental drug under enhanced alternative coverage, the number of Medicare Part D plans that provided coverage for obesity drugs could be higher. For example, some plans may have covered obesity drugs, but none of the beneficiaries enrolled in these plans filled a prescription for such a drug. Medicaid State Drug Utilization Data For information on obesity drugs reimbursed by state Medicaid programs or Medicaid managed care programs within those states, we analyzed CMS’s Medicaid State Drug Utilization data for 2016 and 2017. We analyzed the data to estimate the number of prescriptions reimbursed and total Medicaid state and federal spending—that is, the Medicaid amount reimbursed (state and federal reimbursement, including dispensing fees)—for the nine obesity drugs. These amounts do not include all Medicaid spending for obesity drugs because managed care organizations can be paid for the drugs as part of their capitated payment for all Medicaid services, they are not reimbursed on a per-drug basis, and their payments are not recorded in CMS’s Medicaid State Drug Utilization data. Because our analysis was limited to those instances in which Medicaid reimbursed for an obesity drug, the number of states in which state Medicaid programs or Medicaid managed care plans provided coverage for obesity drugs could be higher. For example, a state could have provided coverage for obesity drugs, but no beneficiaries in that state filled a prescription for an obesity drug. Interviews with Officials in Stakeholder Organizations, Federal Agencies, Insurers, and Others We obtained information and reviewed studies from officials from eight stakeholder organizations (representing medical associations and advocacy groups for obesity research and treatment) on the use of obesity drugs and guidelines for using obesity drugs and to obtain their perspectives on what physicians and other health care providers take into consideration when prescribing these drugs, among other things. These stakeholders were selected because of their medical or scientific expertise, relevant publications, or familiarity with the treatment of obesity and obesity drugs. We also reviewed data and documents and interviewed officials from HHS agencies: CDC, FDA, AHRQ, CMS, and the National Institutes of Health. In addition, we reviewed guidance documents and obtained information from the Office of Personnel Management, which administers the Federal Employees Health Benefits program (FEHBP). FEHBP is the largest employer-sponsored health insurance program in the United States, providing health insurance coverage to about 8 million federal employees, retirees, and their dependents in 2016 through contracts with private health insurance plans. We obtained information about the health insurance coverage of obesity drugs from officials from the three largest pharmacy benefit managers, four large insurers, and two organizations knowledgeable about prescription drug benefits for employer-sponsored health plans. We also reviewed drug formularies for selected private health insurance plans, including FEHBP plans, to determine if any of the nine obesity drugs were included. Literature Review We conducted a literature review of relevant peer-reviewed studies published from January 2012 through January 2019. We identified studies through a search of bibliographic databases, including ProQuest, Scopus, MEDLINE, and International Pharmaceutical Abstracts , using terms such as “obesity,” “weight loss,” and “prescriptions.” Of the 765 citations we identified, we reviewed 220 full studies, which we examined for information related to the use of obesity drugs and individuals who use them, coverage of obesity drugs, and spending for obesity drugs for individuals who used them compared to those who did not. We determined 19 studies were relevant to the use of obesity drugs and 1 study was relevant to coverage of obesity drugs. Our literature review focused on studies with a U.S.-based, adult population (age 18 and older); we excluded studies related to childhood obesity and studies on animals. We also examined available information on the clinical trials conducted prior to FDA approval of the prescription obesity drugs for the U.S. market, including 64 studies from our literature review that summarized one or more of the clinical trials. We also identified 17 additional studies in our literature review that provided relevant background information. Additionally, we reviewed five studies provided by stakeholder organizations (in addition to the studies we had identified in our literature review) that we determined were relevant to our research objectives, as well as guidelines for the use of obesity drugs in obesity treatment. To determine the reliability of the data we used for all four objectives— CDC’s estimates from NHANES, AHRQ’s estimates from MEPS, FDA’s data from IQVIA and the Sentinel System, and CMS’s Medicare Part D Prescription Drug Event data and Medicaid State Drug Utilization data— we reviewed documentation on data collection processes and discussed limitations of the data with the relevant federal agency officials. In addition, we conducted data reliability checks on the data, when appropriate. We determined the data used in this report were sufficiently reliable for our purposes. We conducted this performance audit from April 2018 to August 2019 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. Appendix II: List of FDA-Approved Prescription Obesity Drugs Table 4 provides additional information on the nine prescription drugs approved by the Food and Drug Administration (FDA) to treat obesity that we included in our review. Appendix III: Prevalence of Obesity and Overweight among U.S. Adults This appendix presents national estimates of the prevalence of obesity among U.S. adults age 18 and older, based on the Centers for Disease Control and Prevention’s (CDC) estimates from the National Health and Nutrition Examination Survey (NHANES) for 2013 through 2016. It presents the estimates and the ranges for the 95 percent confidence intervals for prevalence of obesity by age and class of obesity (see table 5), and by insurance coverage and class of obesity (see table 6). It also presents national estimates of the prevalence of overweight (defined as a body mass index of 25 to <30) among U.S. adults, by age and insurance coverage (see table 7). Appendix IV: List of Selected Studies Reviewed Table 8 is a list of selected studies, categorized by specific topic area, that we reviewed that pertain to our research objectives, including information related to the use of obesity drugs and individuals who use them, physician considerations in prescribing obesity drugs, and health insurance coverage of obesity drugs. We identified these studies either through our literature review of peer-reviewed studies published from January 2012 through January 2019 or from one of the stakeholder organizations we contacted. Appendix V: Estimates of New Adult Users of Obesity Drugs, 2008-2017 This appendix presents estimates of prescriptions dispensed for new adult users of obesity drugs by duration of use and by age and gender, using data from the Food and Drug Administration’s (FDA) Sentinel System from 2008 through 2017. Of the 267,836 new users of obesity drugs included in this analysis, the first treatment episode did not exceed 30 days in about 54 percent of patients and exceeded 90 days in about 22 percent of patients. Cumulatively, about 42 percent of patients who used any of the obesity drugs did so for more than 90 days across treatment episodes. (See table 9.) Overall, most new users of obesity drugs were female (82.2 percent) and under age 65 (91.7 percent). (See table 10.) Phentermine and bupropion/naltrexone (Contrave) were the most commonly used obesity drugs in FDA’s Sentinel System analysis. Appendix VI: Reimbursement for Obesity Drugs in Medicare Part D Enhanced Alternative Coverage, 2016 and 2017 This appendix presents information on Medicare Part D plan reimbursement for obesity drugs under enhanced alternative coverage from our analysis of Centers for Medicare & Medicaid Services’ (CMS) Prescription Drug Event data. Medicare Part D plans can choose whether or not to offer enhanced alternative coverage, and not all Medicare Part D plans that provide enhanced alternative coverage cover obesity drugs as supplemental drugs. As of February 2017, 1,949 Medicare Part D plans provided enhanced alternative coverage to 18.9 million Medicare beneficiaries, according to the Medicare Payment Advisory Commission. Additionally, in 2015, total Medicare Part D spending for prescription drugs was about $137 billion—this represents payments from all payers including beneficiaries (cost sharing), and excluding rebates and discounts from pharmacies and manufacturers that are not reflected in prices at the pharmacies. Tables 11 and 12 show the number of claims reimbursed, the number of plans that provided reimbursement, and the amount reimbursed for obesity drugs under Medicare Part D enhanced alternative coverage for 2016 and 2017, respectively. Appendix VII: Reimbursement for Obesity Drugs in Medicaid, 2016 and 2017 This appendix presents information on Medicaid reimbursements for obesity drugs under state Medicaid programs or Medicaid managed care programs within those states from our analysis of Centers for Medicare & Medicaid Services’ (CMS) Medicaid State Drug Utilization data. State Medicaid programs or Medicaid managed care programs reimbursed for at least one obesity drug prescription in 42 states in 2016 and 41 states in 2017. The amount that Medicaid reimbursed and the total number of prescriptions for obesity drugs reimbursed by Medicaid in 2016 and 2017 are shown by state (tables 13 and 14), and by obesity drug (tables 15 and 16). Over half of the prescriptions for obesity drugs reimbursed under Medicaid in 2016 and 2017 were for the generic obesity drug, phentermine. Appendix VIII: Estimates of Medical and Prescription Drug Expenditures for Adults Who Used and Did Not Use Obesity Drugs This appendix presents nationally representative estimates of U.S. adults’ average annual expenditures (spending) for medical care, all prescription drugs, and for obesity drugs from the Agency for Healthcare Research and Quality (AHRQ) based on data from the Medical Expenditure Panel Survey (MEPS) for 2012 through 2016. Table 17 shows the estimated average annual expenditures for all prescription drugs and table 18 shows the estimated average annual medical expenditures, including prescription drugs, per adult who used and per adult who did not use any obesity drugs. For adults age 18 to 64, the differences in the estimated average annual expenditures for all medical care and for all prescriptions drugs per adult who used and who did not use any of the nine obesity drugs in our review were statistically significant. However, the differences in these estimates do not indicate that there was a causal relationship between using obesity drugs and having higher average annual medical or prescription drug expenditures. Table 19 shows the estimated average annual expenditures per adult for obesity drugs. Appendix IX: GAO Contact and Staff Acknowledgments GAO Contact Staff Acknowledgments In addition to the contact above, Kim Yamane (Assistant Director), Lisa A. Lusk (Analyst-in-Charge), George Bogart, Zhi Boon, Kaitlin Dunn, Laurie Pachter, and Merrile Sing made key contributions to this report. Also contributing to this report were Alexander Cattran, Leia Dickerson, Diona Martyn, Christina Ritchie, and Ethiene Salgado-Rodriguez.