Medicaid Pays Less for Prescription Drugs Than Medicare, Report Finds
Both programs receive discounts in the form of rebates from drugmakers, and the report found that the Medicaid rebate was at least twice the rebate Medicare received for 68% of the drugs studied.
The study found that for the top 100 drugs, rebates reduced spending by 19% for Medicare and 45% for Medicaid.
The federal health reform law called for the study.
Medicaid rebates are set by federal law, whereas Medicare rebates are negotiated by private health plans and drugmakers. Last year, the minimum rebate for a brand-name drug was equal to 23% of the average price that drugmakers receive for sales of the product to retail pharmacies.
Drugmakers are required to pay additional rebates to Medicaid if a drug's price increases faster than general inflation. The additional rebates represented about half of all rebates paid to Medicaid for the 100 most prescribed drugs.
HHS Inspector General Daniel Levinson said, "The inflation-based additional rebate is the primary reason Medicaid rebates are substantially higher" than Medicare rebates.
Private insurers have not been able to obtain Medicare rebates as large as ones given to Medicaid, according to the inspector general. Drug companies oppose the Medicaid rebates, which they say are a form of government price controls.
Debt Panel Endorses Plan
President Obama's deficit-reduction commission has endorsed a proposal by Rep. Henry Waxman (D-Calif.) and Sen. John Rockefeller (D-W.Va.) that would require drugmakers to pay the higher Medicaid rebates for individuals enrolled in both Medicare and Medicaid.
The commission projected that plan would reduce spending by $49 billion over a decade (Pear, New York Times, 8/15).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.