New Medicaid Rebate Law

Excluding Authorized Generics from Brand Drug AMP Calculations Increasing Medicaid Rebate Costs for Pharma

The Fair and Accurate Medicaid Pricing Act has been signed into law and will impact Medicaid Rebates paid by pharmaceutical manufacturers.  The Act eliminates the inclusion of less expensive Authorized Generic pricing in the calculation of the Brand drugs Average Manufacturer Price (AMP), which is the basis for Medicaid Rebates.  Now, Brand drug manufacturers will not be able to lower the AMP price by including Authorized Generic sales.  The AMP for Brand drugs will be solely based on the Brand drug sales increasing the brand manufacturer’s rebate costs.

PHSI previously described the OIG report that identified this potential change here: http://phsirx.com/blog/medicaid-rebates-and-the-impact-of-authorized-generics

Brand Drugs without Authorized Generics will not see changes to the current Medicaid Rebates.  Future plans for Authorized Generic launches may be impacted by this regulatory change.

 

Posted October 2019

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