The federal government is a major purchaser of prescription drugs, both directly through federal agencies, such as the Department of Defense (DoD), and indirectly through federal health insurance programs, such as Medicare Part D. In this report, the Congressional Budget Office describes how the prices of brand-name prescription drugs are determined in different federal programs and compares drug prices among those programs in 2017.
The main analysis focuses on the prices (net of applicable rebates and discounts) of 176 top-selling brand-name drugs in Medicare Part D. CBO computed the average price of those drugs per standardized prescription—a measure that roughly corresponds to a 30-day supply of medication.
The average price ranged from $118 in Medicaid to $343 in Medicare Part D. The much lower net prices in Medicaid are the result of higher manufacturer rebates in that program than in Medicare Part D.
The Department of Veterans Affairs (VA) and DoD each paid average prices that were between the average prices paid in Medicaid and Medicare Part D.
CBO also compared the prices of specialty drugs (from the sample of top-selling drugs), which treat chronic, complex, or rare conditions, frequently have high prices, and may require special handling or patient monitoring. The average price of specialty drugs ranged from $1,889 in Medicaid to $4,293 in Medicare Part D.
Those comparisons of average drug prices among federal programs do not indicate how prices would change if the method of determining prices in one program was extended to other programs. In such a scenario, drug manufacturers would very likely alter their price negotiations with purchasers in ways that could affect the prices in all federal programs and in the private sector.