Medicaid Pays less than Medicare for drugs

One would think that drug company pricing to government health care programs (Medicare and Medicaid) would be the same. Guess again!

Medicaid gets much deeper discounts on many prescription drugs than Medicare, in part because Medicaid discounts are set by law whereas Medicare prices are negotiated by private insurers and drug companies, federal investigators said Monday in a new report.


Medicaid and Medicare receive discounts in the form of rebates, which are paid by drug manufacturers when their products are dispensed to people enrolled in the programs.

The inspector general, Daniel R. Levinson, found that rebates reduced spending on 100 widely used brand name drugs by 19 percent in Medicare and by 45 percent in Medicaid. After taking account of the rebates, Mr. Levinson said, Medicaid paid significantly less than Medicare for the same drugs.

Medicynical note: Negotiating for higher discounts would save an estimated 49 billion dollars over ten years.

A billion here and a billion there, soon we’ll be talking real money.

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