Supplemental Rebates From Drug Makers To State Medicaid Programs Grew Fivefold From 2017 To 2024

State Medicaid agencies receive discounted prescription drugs through the Medicaid Drug Rebate Program. States also can negotiate supplemental manufacturer rebates, but evidence on the variation and size of these rebates is limited. Using Centers for Medicare and Medicaid Services data, we found that mean supplemental rebates per beneficiary grew from $19 (2 percent of gross Medicaid drug spending) in fiscal year 2017 to $93 (7 percent) in FY 2024. Rebates varied between states (range: $2-$183 per beneficiary in FY 2024). Mean rebates per beneficiary were $20 higher in thirty-five states that participated in multistate purchasing groups compared with rebates in states negotiating independently, adjusting for number of beneficiaries, fiscal year, and managed care use. Using a difference-in-differences approach, we found that rebates per beneficiary increased by $21 after four states joined purchasing groups compared with rebates in states that had not joined, but these results were not significant. Supplemental rebates may represent a meaningful tool for states to offset growing prescription drug spending.