MEDICAID COST SAVINGS THROUGH DRUG MANUFACTURER REBATES

Executive Summary

State Medicaid agencies can achieve savings by obtaining price rebates directly from manufacturers, under a proposal floated by Sen. Pryor (D-Ark.) on March 20. Pre-negotiated discounts are based on a percentage of products' wholesale acquisition cost, according to the payment plan, excerpted below from the legislation. Rebates from manufacturers: Each state medical Assistance agency shall periodically obtain a rebate from each manufacturer with whom negotiations were successful, in an amount calculated as the product of - * the documented number of tablets or other dosage form units of the manufacturer's prescription drug which has been dispensed to qualified beneficiaries of the state medical assistance program, and * the difference between the negotiated per tablet or other dosage unit price and the per tablet or per unit wholesale acquisition price. State reliance on National Pharmacy and Therapeutics Committee Determinations: The state medical assistance plan shall (except states grandfathered under Section 5(a)(5)) incorporate by reference the determinations of the National Pharmacy and Therapeutics Committee with respect to which prescription drugs are - * medically accepted for a given therapeutic indication, and * equally safe and effective therapeutic alternatives. Access to drug therapies guaranteed: The State medical assistance plan shall provide that at least one drug in every group of equally safe and effective therapeutic alternatives is covered and reimbursable as a preferred drug.