It is important to remember that rebates on drugs are available through State Medicaid Agencies. ICER California reports based upon a useful summary by the Kaiser Family Foundation.
The brand-name drugs can be purchased at the local pharmacy. [Medicaid] rebate is 23.1% of Average Manufacturer Price (AMP) or the difference between AMP and “best price,” whichever is greater. Certain pediatric drugs and clotting medications have a rebate amount that is lower, at 17.1%. The lowest price available to any wholesaler or retailer is considered the best price. This excludes certain government programs like the health program for Veterans. The average price that wholesalers and retailers pay to drug manufacturers is called AMP. The rebate for generic drugs is 13% of the AMP. There is no provision to ensure that you get the best price.
Medicaid rebates are also required if the price rises faster than inflation. There are also supplemental rebates.
The calculation of the rebate also includes an inflation component to reflect rising drug prices. This rebate is calculated as the difference between the drug’s current quarter AMP and its baseline AMP adjusted to the current period by the Consumer Price Index for All…