What is the role of the government in setting drug prices?

In Hawaii, the government plays an important role in setting drug prices. The Hawaii Department of Health (HDOH) is responsible for monitoring changes in drug prices, as well as making decisions about which drugs to include on the State Drug Formulary (SDF). The SDF is a list of drugs that are approved for reimbursement by the state’s Medicaid program. The HDOH also sets maximum allowable cost (MAC) prices for some drugs, which sets the maximum amount the state’s Medicaid program will pay. Any drug whose price exceeds the MAC price cannot be reimbursed by the state’s Medicaid program. The HDOH also works with pharmacy benefit managers (PBMs), which are companies that manage prescription drug benefits for insurance companies. PBMs help to set drug prices by negotiating discounts or rebates on drug prices. Finally, the HDOH works with insurance companies and other health care providers to ensure they are following the state’s drug pricing standards. Insurance companies must meet these standards in order to be approved to sell insurance in Hawaii. Overall, the government plays a key role in setting drug prices in Hawaii. It establishes the State Drug Formulary, sets maximum allowable costs for some drugs, negotiates discounts or rebates with pharmacy benefit managers, and works with insurance companies to ensure they are following the state’s drug pricing standards.

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What is the role of the government in setting drug prices?

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