GAO: Prescription Drugs Are Just 2% of Medicaid Spending

Allyson Funk   |     August 5, 2015   |   SHARE THIS

Last week, the Government Accountability Office (GAO) released a detailed look at Medicaid and key issues facing the program. Despite rhetoric about the cost of prescription medicines in Medicaid, the cost of prescription drugs is not a main driver of cost growth. The GAO report shows that fee-for-service drugs accounted for just 1.7 percent of Medicaid expenditures in 2014.

Even with a new generation of hepatitis C medicines reaching the market in late 2013, prescription medicines still represent a small share of Medicaid spending and are not a main driver of Medicaid spending growth.  

Further, on average about 60 percent of the initial cost of brand medicines is returned to states through Medicaid rebates, so any source citing initial costs greatly overstate costs net of rebates.


GAO’s picture of Medicaid spending helps put prescription drug costs into perspective.


Allyson Funk

Allyson Funk Ally is a senior director of public affairs at PhRMA focusing on Medicare, Medicaid, the Affordable Care Act, and other public programs. Her previous experience includes leading health communications for a large membership organization, supporting public affairs clients, and working for the governor of Louisiana. Ally enjoys travel, trying new restaurants and spending time with Buddy, her 9-year-old rescue Pomeranian. In the fall, she and her husband are almost always wearing Saints gear.

Topics: drug cost, Medicaid

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