The majority of state prescription drug spending is through Medicaid and over 60% of this is through Medicaid Managed Care Organizations. Other sources of state drug spending include for public employees and retirees and persons who are incarcerated (Waldrop & Calsyn, 2020).
- States and drug manufacturers enter into rebate agreements under the Medicaid drug rebate program. States are required to cover all drugs of a manufacturer that enter into the agreement.
- Pharmacy benefit managers (PBMs) are employed by many health plans to administer their drug benefit. They process claims, make coverage decisions, and negotiate with manufacturers for discounts and rebates.
Options to lower Medicaid drug prices:
Options to lower drug unit prices:
- Establish a drug affordability board (a model bill and FAQ for this are available from the National Academy for State Health Policy)
- Use reference pricing
- Maximize participation in the 340B program
- Promote the use of generics
- Reduce the cost of provider-administered drugs
- Import prescription drugs
Comments from discussion participants:
- There are currently threats to the 340B program, making it harder to use.
- High percentages of American prescriptions are not filled and/or refilled; this is often due to cost.
- PCPs do not have transparency on the cost to their patients for prescriptions they write.