OIG: Soaring Medicaid Brand-name Drug Prices Offset by Rebates
The OIG study had been requested by U.S. Sen. Bill Nelson (D-FL) after AARP published its own study last summer showing a significant increase in the cost of brand-name prescription drugs since 2002.
The OIG study looked beyond the reported increases in published prices – which do not often represent the actual price that is paid -- and examined changes in transaction-based prices, and the financial effect of price changes on Medicaid.
ACCESS. INSIGHT. ANALYSIS.
Join the HealthLeaders Media Council
Get members-only access to industry-wide intelligence, forecasts, and analysis positions your organization to benchmark against your peers, identify and respond to key trends shaping healthcare, and make sound business decisions.
Since 2006, Medicaid payments for prescription drugs have remained relatively steady. In 2009, Medicaid drug expenditures totaled approximately $26 billion (not including rebates). Brand-name drugs generally account for about 80% of the total dollars reimbursed. However, Medicaid recouped approximately one-third of its costs for prescription drugs between 2006 and 2009, an average annual savings of about $8 billion, OIG said.
Drug makers pay higher rebates for brand-name drugs than for generic drugs. From 1996 to 2009, the unit rebate amount (URA) for a generic drug was 11% of the wholesale price and the basic URA for a brand-name drug was the around 15%, OIG said.
John Commins is a senior editor with HealthLeaders Media.
- CMS Seeks to 'Rapidly Reduce' Medicare Spending with $1B in Grants
- Building a Better Healthcare Board
- Patient Harm Data to Remain on Medicare's Hospital Compare Site
- Case Study: Advance Care Conversations
- Quiet ORs Better for Patient Safety
- Hard-Nosed About Physician Teamwork
- Tavenner Confirmed as CMS Administrator
- CMS Releases Hospital Pricing Data
- Hospital Pricing Data Dump Won't Hurt You, Yet
- Evidence-Based Practice and Nursing Research: Avoiding Confusion