Medicare pays three times as much for brand-name drugs at retail pharmacies as Medicaid and two-and-a-half times more for specialty drugs, according to a new analysis by the Congressional Budget Office.

The vast difference occurs because of how drug prices are established for the two programs.  Under Medicare Part D, individual payers and manufacturers negotiate prices based on commercial market conditions while for Medicaid, federal law requires manufacturers to provide rebates.

Learn more about the differences between Medicare and Medicaid prescription drug prices, how and why those differences occur, and their implications in the CBO report “A Comparison of Brand-Name Drug Prices Among Selected Federal Programs.”