A evaluation – Healthcare Economist

A useful reminder of what rebates are for medicine lined below State Medicaid Companies. ICER reports of their California, primarily based on a useful abstract from the Kaiser Family Foundation:

For model identify medicine, the [Medicaid] rebate is 23.1% of Common Producer Worth (AMP) or the distinction between AMP and “greatest value,” whichever is bigger. Sure pediatric and clotting medicine have a decrease rebate quantity of 17.1%. Finest value is outlined because the lowest out there value to any wholesaler, retailer, or supplier, excluding sure authorities applications, such because the well being program for veterans. AMP is outlined as the typical value paid to drug producers by wholesalers and retail pharmacies. For generic medicine, the rebate quantity is 13% of AMP, and there’s no greatest value provision

Just like the Inflation Discount Act, Medicaid additionally requires rebates if costs rise sooner than inflation. Plus there are supplemental rebates:

The rebate calculation additionally consists of a further inflationary element to account for rising drug costs over time. This rebate is calculated because the distinction between the drug’s present quarter AMP and its baseline AMP adjusted to the present interval by the Shopper Worth Index for All City Customers (CPI-U). In different phrases, if a drug’s value will increase sooner than inflation, the producer has to rebate the distinction to Medicaid…

As of June 2019, 47 states and DC had supplemental rebate agreements in place.¹⁵ These supplemental rebates will not be topic to the perfect value ground. States usually use placement on a most popular drug record (PDL) as leverage to barter supplemental rebates with producers.

Beneficiary value sharing within the Medicaid program can also be very restricted:

Federal guidelines restrict beneficiary cost-sharing to nominal quantities: as much as $4 for most popular medicine and $8 for non-preferred medicine, for people with incomes at or under 150% of the federal poverty stage (FPL) and barely larger for these with larger incomes

You possibly can learn extra particulars here.