Budget Measure Requires Generic Drugmakers to Pay Inflation-Based Rebates to Balance Prices

President Barack Obama signed off on a budget bill Nov. 2 that will require generics makers to pay inflation-based rebates if prices rise too quickly, based on the inflation-adjusted baseline average manufacturer price.

Until now, only manufacturers of single source and innovator multiple source drugs were required to pay an additional rebate if the price of the drug had increased faster than inflation.

H.R. 1314, dubbed the “Bipartisan Budget Act of 2015,” includes a provision that requires the 600 drug manufacturers who participate in the Medicaid Drug Rebate Program to enter into a rebate agreement with the Department of Health and Human Services in exchange for state Medicaid coverage of most of the manufacturer’s drugs.

Section 602 of the bill states that “the amount of the rebate … shall be increased in the manner that the rebate for a dosage form and strength on a single-source drug or an innovator multiple-source drug is increased.”

Under the law, quarterly rebates are paid to states, which in turn share the amount with the federal government to offset the prescription drug costs under the Medicaid program.

The policy change will take effect during the rebate period one year after the bill was signed into law.

The measure also will serve as the baseline for the House and Senate Appropriations Committees to come up with spending bills by Dec. 11 to cover spending for FY 2016. — Michael Cipriano


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