Medicaid Outpatient Prescription Drug Trends During the COVID-19 Pandemic
This analysis of Medicaid prescription drug utilization and spending trends builds on a previous KFF analysis of Medicaid prescription drug trends using the most recent data available. This analysis uses 2017 through 2020 State Drug Utilization Data (SDUD), downloaded in November 2021, merged with data from IBM Micromedex RED BOOK. The SDUD is publicly available data provided as part of the Medicaid Drug Rebate Program. It provides data on the number of prescriptions, Medicaid spending before rebates, and cost-sharing for rebate-eligible Medicaid outpatient drugs. The RED BOOK data is from September 2021. The use of RED BOOK data does not represent and should not be characterized as a RED BOOK endorsement of any data, findings, or other content presented in this report. The SDUD and the RED BOOK data were merged at the NDC-level to incorporate the therapeutic/pharmacologic category of the product.
The SDUD provides spending and utilization data by NDC, quarter, managed care or fee-for-service, and state. It also provides this data summarized for the whole country. CMS has suppressed data cells with fewer than 11 prescriptions, citing the Federal Privacy Act and the HIPAA Privacy Rule. This analysis used the national data because less data is suppressed at the national versus state level.
This analysis uses gross Medicaid spending because rebate data is unavailable to the public at the NDC level. Rebates have a considerable effect on Medicaid drug spending overall, lowering net spending, but this effect varies at the drug level as different drugs receive different rebates. We do include analysis of the Medicaid Budget and Expenditure System’s (MBES) FMR net expenditure data, available for the federal fiscal year, to understand overall Medicaid rebate trends. Additionally, although Medicaid beneficiaries largely self-administer drugs that are prescribed in an outpatient setting, medical practitioners must administer some drugs. Although states are instructed to collect drug rebates on physician-administered outpatient drugs that are not billed as a bundled service, physician-administered drugs subject to a rebate can vary from state to state. Because specialty drugs are often physician-administered, it is possible that the data reflects lower Medicaid spending and utilization of certain drugs of this kind.