The Medicaid Drug Rebate Program (MDRP) requires pharmaceutical manufacturers to issue rebates to Medicaid for covered outpatient drugs. When they offer prescription drug benefits, Medicaid programs must cover nearly all drugs, potentially reducing Medicaid’s leverage to negotiate discounts. Policymakers created the MDRP in response to rising drug costs and to help ensure Medicaid receives comparable discounts to other payers in the market. However, the way the MDRP calculates rebates may discourage manufacturers from offering deeper discounts to private purchasers, limiting potential cost savings for millions of patients covered by their employers or private health plans.
This paper provides background on “best price” rules and their impact on patients.