Medicaid's fee-for-service drug expenditures increased 18% per annum
Posted by Clark Venable on 12/19/2004
Medicaid’s Reimbursements to Pharmacies for Prescription Drugs (pdf)
This Congressional Budget Office report focuses on the markup paid to pharmacies by Medicaid for buying and dispensing drugs. For example, in 2002 medicaid reimbursed pharmacies an average of $46 per prescription. Of that amount, $14 was for purchase of the drug itself. The $32 difference constitutes the 'markup', which has been increasing at a rate of roughly 10% per year between 1997 and 2002.
" "Between fiscal years 1997 and 2002, Medicaid’s expenditures on prescription drugs in the fee-for-service part of the program increased from $10.2 billion to $23.4 billion. About one-quarter of those amounts went to wholesalers and pharmacies to compensate them for distributing and dispensing the drugs.
Prepared at the request of the House Committee on Energy and Commerce, this paper examines recent trends in that “markup”—or the difference between the total amount that state Medicaid agencies paid to pharmacies and the amount that pharmacies and wholesalers paid to purchase the drugs from manufacturers. In keeping with the Congressional Budget Office’s (CBO’s) mandate to provide objective, impartial analysis, the paper makes no recommendations. " "
Prepared at the request of the House Committee on Energy and Commerce, this paper examines recent trends in that “markup”—or the difference between the total amount that state Medicaid agencies paid to pharmacies and the amount that pharmacies and wholesalers paid to purchase the drugs from manufacturers. In keeping with the Congressional Budget Office’s (CBO’s) mandate to provide objective, impartial analysis, the paper makes no recommendations. " "
and
" "Overall, the largest single factor contributing to the rapid increase in markups was the use of newer generic drugs, with their high markups. Another factor was the use of newer single-source brand-name drugs, which had somewhat higher average markups than did older brand-name drugs." "
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