1400 Eye Street, NW
Suite 330
Washington DC 20005
phone 202.331.4601 fax
202.296.3526
Darnell Dent, Chairman
Margaret A. Murray, Executive Director
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Results in from ACAP, Lewin Group Study on Drug Rebate Program -- In 2003, findings from the study by Nancy Beronja and Joel Menges of the Lewin Group and Margaret Murray of the Association for Community Affiliated Plans (ACAP) were published. The resource paper, published and funded by the Center for Health Care Strategies (CHCS), found that MCOs averaged a six percent rebate on brand drugs, while usually receiving no rebates on generic drugs. States’ rebates represent, on average, 18 to 20 percent of ingredient cost for brands, and 10 to 11 percent for generics. As a result of the significantly larger rebates obtained by state fee-for-service (FFS) Medicaid programs, post-rebate spending on an individual drug level was, on average, approximately 16 percent lower for states than for the Medicaid managed care organizations (MCOs), measured on a cost per day basis. The report concludes that the MCOs are able to reduce their average per member per month drug costs for families in Medicaid managed care to $17.36 compared to $20.46 in the state fee-for-service programs. The report postulates that although the MCOs are at a price disadvantage due to the their inability to access the federal Medicaid drug rebate program, they make up the price disadvantage by paying less in dispensing fees, using more generics and other lower cost drugs, and lowering the number of prescriptions per month. These figures suggest that pharmacy costs in the FFS Medicaid setting end up 18 percent higher than in the managed care setting even though plans are at a disadvantage with respect to the manufacturers’ rebate. Click here to read the full report:
Comparisons of Medicaid Pharmacy Costs and
Usage between the Fee-for-Service and Capitated Setting |