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Officials flag rising specialty drug costs, rebates and accelerated‑approval risks in Medicaid pharmacy briefing
Summary
Brendan Joyce, clinical and pharmacy services director for Medicaid, told the committee a small number of high‑cost drugs now account for a large share of prescription spending and that supplemental and mandatory rebates are critical to keeping net pharmacy costs manageable.
Brendan Joyce, clinical and pharmacy services director for Medicaid, told the Appropriations Human Resources Division that specialty and high‑cost drugs now dominate pharmacy spend and that rebates are central to managing net costs.
Joyce described several trends: a small number of drug classes and products account for a large portion of pre‑rebate spending (for example, six drug classes—cystic fibrosis, immunomodulators, migraine, non‑insulin diabetes medications, pulmonary hypertension, and tardive dyskinesia—produced a 138% increase in spend between Q1 2020 and Q3 2024 while claims volume rose only 14% for those classes). He also reported that 50 “hyper‑cost” drugs represent roughly a third of the drug budget and that a growing pipeline of cell‑ and gene‑therapy treatments includes several products with list prices in the millions.
Joyce emphasized the role of rebates: North Dakota invoiced just over $4,000,000 in supplemental drug rebates in a single quarter (Q3 2024), and the department has collected about $811,000,000 in total drug rebates since 1991. He showed that post‑rebate net spend has grown much more slowly than pre‑rebate payments and said the supplemental rebate program (begun in 2015 for the state) is a material offset to gross spending.
The session included a review of congressional and federal rule changes that have altered rebate mechanics. Joyce told the committee that removal of an AMP cap and changes to the unit rebate offset amount (UROA) reduced the department’s effective rebates for some products and contributed to recent net spend increases in several classes.
Joyce also described clinical and program‑integrity challenges: drug shortages force switches to higher‑cost alternatives; accelerated‑approval products (drugs approved on surrogate endpoints pending confirmatory trials) carry risk—some approvals were later withdrawn or had delayed confirmatory evidence—and Medicaid can continue to pay while confirmatory trials remain pending.
The committee reviewed a pending bill, House Bill 1451, that would require Medicaid coverage for anti‑obesity medications. Joyce said the bill’s fiscal note (when posted) indicated a roughly $4.4 million per‑year net increase—about a 10% rise in the drug budget—if broader GLP‑1 coverage similar to other states were adopted. He and other lawmakers noted early evidence on those drugs’ clinical effects but also described high drop‑off rates and the time required for any medical‑cost offsets to appear.
Ending: Joyce told the committee the department pursues supplemental rebates, value‑based agreements where feasible, utilization management and prior‑authorization rules for high‑cost products, and ongoing work to track shortages and the impacts of federal rebate rules. He said staff will continue to provide data to the committee on fiscal notes and specific drug classes where possible.
