Medicaid Rebates for Brand Drugs Significantly Higher Than for Medicare Part D

The HHS Office of Inspector is urging Congress to rewrite the Medicare Part D in the Social Security Act to allow for collection of additional rebates from drug companies.

A study released last week compared expenditures and rebates for 200 selected brand name drugs in both programs in 2012. Expenditures for Medicaid total $35.7 billion versus $66.5 billion for the Part D prescription drug plan. At the same time, Medicaid received $16.7 billion in rebates from drugmakers, accounting for 47 percent of expenditures, compared with $10.3 billion in rebates for Medicare, or 15 percent of Part D expenditures.

A major driver of the higher Medicaid rebates was the added amount owed when prices for brand name drugs increased faster than inflation, OIG says. That inflation-based additional rebate, which is meant to protect Medicaid, is not available for Part D.

In addition, minimum manufacturer rebates under Medicaid are defined by federal statute, while similar rebates under Part D are determined solely through negotiations between drugmakers and pharmacies and Part D sponsors, the report says.

Because federal law prevents CMS from interfering with those negotiations, OIG recommends that Congress and the agency explore ways of getting additional rebates under Part D. Options include examining the impact of beneficiaries eligible for both Medicare and Medicaid on each program’s rebate totals and analyzing ways to protect Part D from significant hikes in drug prices, the report says.

Read the study here: www.fdanews.com/04-15-OIG-Study.pdf. — Jonathon Shacat