Medicaid Pays Less Than Medicare for Many Prescription Drugs, U.S. Report Finds

WASHINGTON — 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.
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The study comparing Medicare and Medicaid was required by the new health care law.

Drug companies oppose the type of discounts required by Medicaid, seeing them as government price controls. Drug makers say they prefer Medicare’s market-oriented approach, in which discounts are negotiated by drug plans and manufacturers.

Two Democrats, Representative Henry A. Waxman of California and Senator John D. Rockefeller IV of West Virginia, recently introduced bills that would require drug manufacturers to pay the higher Medicaid rebates for drugs provided to Medicare beneficiaries who are also eligible for Medicaid. President Obama’s deficit-reduction commission has endorsed the proposal, saying it could save $49 billion over 10 years.