Understanding the Medicaid Prescription Drug Rebate Program - What is the Medicaid drug rebate program and how does

This brief explains the MDRP to help policymakers and others understand how Medicaid pays for drugs and any potential consequences of policy changes for the program by answering the following questions: • What is the MDRP and how does it work? • What is the impact of the MDRP? • What is the role of managed care plans and pharmacy benefit managers in Medicaid rebates? • How does the 340B program in. [...] HHS uses this price data to calculate the unit rebate amount (URA) based on the rebate formula and inflationary component and provides the URA to states.17 States multiply the units of each drug purchased by the URA and invoice the manufacturer for that amount. [...] Some states are Understanding the Medicaid Prescription Drug Rebate Program 4 reassessing their use of PBMs in managed care due to issues with the lack of transparency around PBM payments and the prevalence of “spread pricing.” Spread pricing refers to the difference between the payment the PBM receives from the MCO and the reimbursement amount it pays to the pharmacy.23 In the past, PBMs have bee. [...] Policy changes that would allow the federal government to negotiate Medicare prices also may have implications for Medicaid, depending on how the price applies to the wider marketplace and the prices used to set Medicaid rebates.65 Summary The MDRP helps offset federal and state costs of most outpatient prescription drugs dispensed to Medicaid beneficiaries and ensures access to medication for Med. [...] Because of the key role Medicaid plays in providing drugs for Understanding the Medicaid Prescription Drug Rebate Program 9 beneficiaries and setting the floor for prices, it is important for policy makers to understand the implications of any proposed policies for the rebate program.