April 29, 2015—Congress and the Centers for Medicare & Medicaid Services should take a harder look at obtaining additional prescription drug rebates under Medicare Part D, the Health and Human Services Office of Inspector General recommends in a new report. [ms-protect-content id=”2799″]
The April 24 report is a follow-up to a congressionally mandated comparison of Medicaid and Medicare Part D drug rebates that OIG did in 2011. The first study found that state Medicaid agencies pay significantly less for brand-name drugs than commercial Medicare Part D plan sponsors because the statutorily defined Medicaid rebates that states receive on brand-name drugs are “substantially higher” than those negotiated by Part D plans.
OIG reached similar conclusions in the new study, which compared total 2012 Part D and Medicaid expenditures and rebates for the 200 brand-name drugs with the highest Part D expenditures. OIG also looked at “whether the manufacturers of the selected drugs owed inflation-based [Medicaid] rebates and the amount of these inflation-based rebates.”
The OIG found that total rebates in 2012 under Medicaid were substantially higher than total rebates under Part D ($16.7 billion versus $10.3 billion) even though Medicaid drug expenditures were much lower than Medicare Part D expenditures ($35.7 billion versus $66.5 billion). More than half (54 percent) of Medicaid rebates owed by manufacturers were attributed to the inflation-based add-on rebates. The OIG also found that Medicaid’s net unit costs (i.e., the pharmacy reimbursement amounts minus rebates) were much lower than net unit costs under Part D.
Options for obtaining more Part D rebates include (1) “examination of the impact of dual-eligible beneficiaries on each program’s rebate totals” and (2) “an analysis of methods to protect Part D from increases in drug prices,” the OIG concluded.
Sen. Bill Nelson (D-Fla.), who requested the study, responded by introducing a bill that would require drugmakers to give Medicare rebates on drugs for dual-eligibles that would be equal to what Medicaid would have gotten if it had been the payer. Rep. Kathy Castor (D-Fla.) filed a companion bill in the House.
Pharmaceutical Research and Manufacturers of America has denounced similar legislation in the past as “mandatory government price controls” that “would bring higher premiums and copays, more restricted access to medicines for seniors and Americans with disabilities, and diminished research on the next generation of medicines.” [/ms-protect-content]