regulation set to reduce medicaid reimbursements

PharmacoEconomics & Outcomes News 533 - 28 Jul 2007

Regulation set to reduce Medicaidreimbursements

The US government has issued a new regulationwhich will alter the method of setting limits for thereimbursement of prescription drug payments to stateMedicaid agencies by the federal government.

This regulation is expected to save state and federalgovernments $US8.4 billion over the fiscal years 2007 to2011. The Medicaid programme will still spend anexpected $US140 billion on drugs over the same period.

As part of the 2005 Deficit Reduction Act (DRA), thischange is a response to both the GovernmentAccountability Office and the HHS Office of theInspector General’s reports, which revealed thatMedicaid payments to pharmacies for genericmedicines were significantly greater than what thosepharmacies were actually paying for such drugs.

The DRA has also introduced transparency into theprocess of Medicaid prescription drug pricing byrequiring that, for the first time, Average ManufacturersPrices (AMPs) for drugs be publicly reported on theInternet. Manufacturers will now be required to reportAMPs monthly, as well as quarterly; this information willbe used as the basis for determining state drugreimbursement prices.Centers for Medicare and Medicaid Services. New Medicaid Drug Payment Rule.Media Release : 6 Jul 2007. Available from: URL: http://www.cms.hhs.gov 809078117

1

PharmacoEconomics & Outcomes News 28 Jul 2007 No. 5331173-5503/10/0533-0001/$14.95 Adis © 2010 Springer International Publishing AG. All rights reserved