State strategies to address medicaid prescription spending: negotiated pricing vs price transparency

Abstract

This research longitudinally examines the association between levels of state Medicaid prescription spending and the state strategies intended to constrain cost increases: the negotiated pricing strategy, as indicated by state rebate programs, and the price transparency strategy, as indicated by state operation of All-Payer Claims Databases. The findings demonstrate evidence that state Medicaid prescription spending is influenced by the negotiated pricing strategy, especially Managed Care Organization (MCO) rebates under the Patient Protection and Affordable Care Act, but not influenced by the price transparency strategy. State decisions for MCO rebates, such as carving prescription benefits into managed care benefits, were effective in containing levels of Medicaid prescription spending over time, while other single- and multi-state rebate programs were not. Based on these findings, state policymakers may consider utilizing the MCO rebate program to address increases in Medicaid prescription spending.

The Impact of Public Reporting Schemes and Market Competition on Hospital Efficiency

“…In contrast, hospitals in APCD-implementing states were likely to be less efficient than those in nonadopting states. The efficiency loss of hospitals with APCDs indicates that hospitals in states that implement APCDs may have struggled to accommodate their operations to the new environment [56]. The degree of data availability was positively related to efficiency but not statistically significant.…”

Exploring the consequences of greater price transparency on the dynamics of pharmaceutical markets

“…A recent study from the United States suggested that the sharing of prescription expenditure data among payers did not affect state Medicaid spending (Noh, Janousek and Park, 2021 [13]). Five studies from Brazil, India and South Africa showed no consistent price reductions arising from public price disclosure (Bangalee V and Suleman F., 2016 [14]; Bangalee and Suleman, 2015 [15]; Mattila, Babar and Suleman, 2021 [16]; Kohler et al, 2015[17]; Gotham, Barber and Hill, 2018 [18]) Price regulation and disclosure in South Africa has not been seen to have led to withdrawals of medicines from the market as it could have been anticipated (Naidoo and Suleman, 2021 [19]).…”

“…40 The risk of withdrawal of some medicines from the Turkish market was also mentioned as a consequence of China referencing medicine prices in Türkiye, where prices are low due to the devaluation of the Turkish Lira, and trade regulations ban parallel export (Mondaq, 2022[55]). However, other experts referred to these threats as a tactic used by industry for leverage in negotiations; in fact, the adoption of price transparency policies in some countries, such as South Africa, has not been seen to have led to withdrawals of medicines from the market (Naidoo and Suleman, 2021 [19]). Some policymakers are concerned that moves towards greater price transparency could negatively impact accessibility, since companies could threaten withdrawal from markets or set prices at unaffordable levels (European Observatory on Health Systems and Policies, 2022 [11]).…”

“…Some literature on international reference pricing suggests mixed evidence about price convergence, depending on the sample of medicines and countries (Houy and Jelovac, 2015[61]). (Bangalee V and Suleman F., 2016 [14]; Grennan and Swanson, 2020 [23]; Ahmad, Hatah and Makmor-Bakry, 2019 [24]; Bangalee and Suleman, 2015 [15]; Naidoo and Suleman, 2021 [19]). On patient access, experts noted that transparency could, in theory, favour competition, as companies could better predict the financial consequences of market entry decisions; however, this would not necessarily lead to broader or faster access.…”

“…In Denmark, the publicly-owned company Amgros19 conducts negotiations and runs tenders for medicines for Danish hospital pharmacies;  In the European Union, under the current Pharmaceutical Strategy for Europe 20 , the European Commission is advancing cooperation among national pricing and reimbursement authorities and healthcare payers (i.e. the National Competent Authorities on Pricing and Reimbursement (NCAPR) group) to foster transparency of price information and help strengthen pricing and reimbursement decisions of Member States;  In the Netherlands, the Dutch Hospital Benchmark is a voluntarily mechanism for sharing anonymised data on net prices and volumes for products subject to confidential terms among a network of hospitals.…”