A helpful reminder of what rebates are available for drugs covered by the state Medicaid agency. ICER report In their state of California, based on the Kaiser Family Foundation:
For brand-name drugs, [Medicaid] The rebate is 23.1% of the Average Manufacturer’s Price (AMP) or the difference between AMP and the “Best Price”, whichever is greater. Certain pediatric and blood-clotting drugs had a lower rebate amount of 17.1%. Best price is defined as the lowest available price from any wholesaler, retailer, or supplier, excluding certain government programs such as the Veterans Health Plan. AMP is defined as the average price paid by wholesalers and retail pharmacies to drug manufacturers.For generic drugs, the rebate amount is 13% of AMP, no best price provision
Like the Lower Inflation Act, Medicaid requires rebates if prices rise faster than inflation. In addition there are additional rebates:
The rebate calculation also includes an additional inflation factor to account for increases in drug prices over time. The rebate is calculated as the difference between the drug’s AMP for the current quarter and the baseline AMP adjusted for the current period based on the Consumer Price Index for All Urban Consumers (CPI-U). In other words, if drug prices rise faster than inflation, manufacturers must refund the difference to Medicaid. …
As of June 2019, 47 states and the District of Columbia had supplemental rebate agreements.15 These supplemental rebates are not subject to a minimum price. States often use placement on the Preferred Drug List (PDL) as leverage to negotiate supplemental rebates with manufacturers.
Beneficiary cost-sharing in Medicaid is also very limited:
Federal regulations limit beneficiary cost-sharing to a nominal amount: up to $4 for preferred drugs and $8 for non-preferred drugs, slightly higher for individuals with incomes at or below 150% of the Federal Poverty Level (FPL)
You can read more details here.
