Utilization and Spending Trends in Medicaid Outpatient Prescription Drugs, 2015-2019

Issue Brief
  1. 42 USC § 1396r-8(a)(1).

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  2. For brand name drugs, the rebate is 23.1% of Average Manufacturer Price (AMP) or the difference between AMP and “best price,” whichever is greater. Best price is defined as the lowest available price to any wholesaler, retailer, or provider, excluding certain government programs, such as the health program for veterans. For generic drugs, the rebate amount is 13% of AMP, and there is no best price provision. Rachel Dolan, Understanding the Medicaid Prescription Drug Rebate Program (Washington, DC: KFF, November 2019) https://www.kff.org/medicaid/issue-brief/understanding-the-medicaid-prescription-drug-rebate-program/

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  3. CBO analysis of 176 top-selling brand-name drugs in Medicare Part D. CBO computed the average price of those drugs per standardized prescription—a measure that roughly corresponds to a 30-day supply of medication. Congressional Budget Office, A Comparison of Brand-Name Drug Prices Among Selected Federal Programs (CBO, February 2021), https://www.cbo.gov/system/files/2021-02/56978-Drug-Prices.pdf

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  4. On average, Medicaid obtains rebates on brand drugs that are 77 percent of the average Medicaid retail price but only 60% for specialty drugs. The inflation-based component of the rebate averaged 31 percent of the retail price in Medicaid for specialty drugs and 43 percent for nonspecialty drugs. Congressional Budget Office, A Comparison of Brand-Name Drug Prices Among Selected Federal Programs (CBO, February 2021), https://www.cbo.gov/system/files/2021-02/56978-Drug-Prices.pdf

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  5. Buprenorphine, Naltrexone, and Methadone are FDA approved drugs used in Medication Assisted Treatment for opioid addiction. Buprenorphine and Methadone reduce withdrawal symptoms, and Naltrexone is an antagonist and blocks the effects of both opioids and alcohol. Naloxone is an antagonist that can reverse an opioid overdose. Methadone is administered when used to treat OUD, which is not reported in the Medicaid SDUD data. See Lisa Clemans-Cope, Emma Winiski, Victoria Lynch, and Marni Epstein, Rapid Growth in Medicaid Prescriptions and Spending to Treat Opioid Use Disorder and Opioid Overdose from 2010 to 2018 (Washington, DC, Urban Institute, July 2020), https://www.urban.org/research/publication/rapid-growth-medicaid-prescriptions-and-spending-treat-opioid-use-disorder-and-opioid-overdose-2010-2018/view/full_report.

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  6. Medicaid Drug Utilization Review State Comparison/Summary Report FFY 2015 Annual Report, Prescription Drug Fee-For-Service Programs, CMS, December 2016, https://www.medicaid.gov/medicaid-chip-program-information/by-topics/prescription-drugs/downloads/2015-dur-summary-report.pdf; Medicaid Drug Utilization Review State Comparison/Summary Report FFY 2016 Annual Report, Prescription Drug Fee-For-Service Programs, CMS, October 2017, https://www.medicaid.gov/medicaid-chip-program-information/by-topics/prescription-drugs/downloads/2016-dur-summary-report.pdf; Medicaid Drug Utilization Review State Comparison/Summary Report FFY 2017 Annual Report, Prescription Drug Fee-For-Service Programs, CMS, October 2018, https://www.medicaid.gov/medicaid/prescription-drugs/downloads/drug-utilization-review/2017-dur-summary-report.pdf; Medicaid Drug Utilization Review State Comparison/Summary Report FFY 2018 Annual Report, Prescription Drug Fee-For-Service Programs, CMS, https://www.medicaid.gov/medicaid/prescription-drugs/downloads/drug-utilization-review/2018-dur-ffs-summary-report.pdf; Medicaid Drug Utilization Review State Comparison/Summary Report FFY 2019 Annual Report, Prescription Drug Fee-For-Service Programs, CMS, https://www.medicaid.gov/medicaid/prescription-drugs/downloads/2019-dur-ffs-summary-report.pdf; See also “Section VI – Generic Policy and Utilization Data” in state DUR Reports, https://www.medicaid.gov/medicaid/prescription-drugs/drug-utilization-review/annual-reports/index.html.

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  7. Of the states that required more the restrictive requirements, a majority required preauthorization to enable a pharmacist to provide a brand drug when a generic was available. States included other requirements, such as requiring the submission of a MedWatch Form and requiring a medical reason to override the use of a generic, and some implement more than one restrictive requirement. Ibid.

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