In Three States, Growth In Prescription Drug Spending Is Unaffordable Even When Accounting For Rebates


Contact: Jessica Mar and January Angeles 

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Over the past five years, several states have implemented statewide cost growth targets to increase transparency and accountability around the drivers of health care spending growth. Many of these states have highlighted spending on prescription drugs as a leading contributor to high and rising health care spending in the commercial market.

Pharmaceutical manufacturers often contend that drug rebates significantly lower prescription drug prices and growth rates to an extent that is not always captured in spending data. Drug rebates are discounts that drug manufacturers give to third-party entities such as health insurers and pharmacy benefit managers on the cost of prescription drugs. Manufacturers consider drug-specific rebate amounts to be proprietary information, and so they are not publicly reported except in those states (for example, New Jersey) that require disclosure by law.

As part of their efforts to implement health care cost growth targets, several states now require payers to provide aggregate data on pharmaceutical rebates they receive. In Connecticut, Rhode Island, and Oregon, these new data show that even after accounting for rebates, spending on prescription drugs has continued to grow at an unaffordable rate.

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