A new method of setting limits on what the federal government will reimburse state Medicaid agencies for prescription drug payments--aimed at reining in inflated drug product payments--was announced July 6 in a final rule put on display at the Federal Register.
The new regulation is expected to save states and the federal government $8.4 billion over the next five years. Even with this change, the Medicaid program is still expected to spend $140 billion for drugs over the same time period (FY07-11).
Earlier efforts to stem growth in Medicaid drug costs were unsuccessful. Prior to the Deficit Reduction Act (DRA), many drug companies reported prices to the commercial pricing compendia that bore little relationship to the drug’s cost. Actual drug costs were considered proprietary information that was kept secret, and CMS was prohibited by law from disclosing average manufacturers price (AMP).
The DRA also requires that for the first time, AMPs be publicly reported on the Internet. States will now be able to use actual AMP information as the basis for setting drug reimbursement. Read the press release.
