Medicaid Outpatient Prescription Drug Trends During the COVID-19 Pandemic
Under the Medicaid Drug Rebate Program, manufacturers that want their drugs covered by Medicaid must sign an agreement with the Secretary of Health and Human Services stating that they will rebate a specified portion of the Medicaid payment for the drug to the states, who in turn share the rebates with the federal government. In addition to federal statutory rebates, most states negotiate supplemental rebates. Both statutory and supplemental rebates account for a sizeable share of prescription drug spending, lowering aggregate drug spending by about 55% in 2019. Rebates are not included in this analysis due to lack of data availability (see Appendix for details). While rebates have implications for net Medicaid spending, understanding trends in gross spending and utilization provides important context for pharmacy benefit policy by highlighting underlying cost factors.
KFF analysis of 2019-2020 State Drug Utilization Data, November 2021; IBM Micromedex RED BOOK, September 2021.
KFF analysis of Medicaid Budget and Expenditure System (MBES) FMR net expenditure data as of September 2021; 2018-2020 State Drug Utilization Data, November 2021; IBM Micromedex RED BOOK, September 2021.
KFF analysis of CMS, Medicaid & CHIP: Monthly Application and Eligibility Reports, last updated October 26, 2021; 2019-2020 State Drug Utilization Data, November 2021; IBM Micromedex RED BOOK, September 2021.