Health Reform Insights: Medicaid, Medicare & Prescription Drug Coverage

Federally mandated rebates for prescription drugs in Medicaid were expanded significantly – by $38 billion – under the new health reform law, with extraordinary financial, administrative, and compliance implications for pharmaceutical manufacturers, Medicaid health plans, and state Medicaid programs.

In a new journal article, I explain changes to the Medicaid drug rebate program and implications for drug makers, health plans, and states. The article appeared in the June 2010 issue of the peer-reviewed journal American Health & Drug Benefits.

The article provides a primer on the basics of the Medicaid drug rebate program, including Average Manufacturer Price (AMP), Best Price, federal rebate agreements with drug manufacturers, supplemental rebates, Preferred Drug Lists (PDLs), reporting of drug prices by pharma and biotech companies, and drug utilization reporting by state Medicaid agencies.

The article then summarizes the major changes effective for 2010, notably (1) increased minimum federal rebate percentages for brand and generic drugs and (2) extension of federally mandated minimum drug rebates to Medicaid drug utilization in Medicaid managed care organizations. It concludes with a brief discussion of implications for states, drug makers, and health plans.

This is the first post in our new Unleashed series called Health Reform Insights, in which expert TogoRunners outline the impact of the Patient Protection and Affordable Care Act (PPACA), the Health Care and Education Reconciliation Act (HCERA) and other health related legislation. From Medicaid prescription drug pricing to changes in coverage, reimbursement, and care delivery, we clearly demonstrate many of the complexities of health legislation and what it means for the healthcare community.

The first installment is from TogoRun senior counselor Kip Piper, a leading expert on Medicare, Medicaid, and health reform. Be sure to come back for future installments of this illuminating series.

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