Lawmakers Seek to Curb Skyrocketing Generic Drug Prices

Two prominent lawmakers are following through on a promise to do something about recent rises in generic drug prices, with identical House and Senate bills that would force generic drugmakers to pay state Medicaid rebates when prices rise faster than inflation.

The Medicaid Generic Drug Price Fairness Act of 2015, introduced Monday by Sen. Bernie Sanders (I-Vt.) and Rep. Elijah Cummings (D-Md.), follows concerns over generic drug price hikes outlined in February letters to HHS Inspector General Daniel Levinson.

These inflationary rebates are standard practice for branded drugmakers. Generics drugmakers, by contrast, pay state Medicaid programs a base rebate of 13 percent. An inflationary rebate would likely be considerably higher, as many generic drug prices have risen at rates greatly exceeding the inflation rate, a spokeswoman for Sanders said.

Last month, Levinson promised to calculate the extent to which quarterly average manufacturer prices for the top 200 generic drugs, as ranked by Medicaid reimbursement, overshot the inflation rate.

Data on generic drugs gleaned from the Healthcare Supply Chain Association and included in the lawmakers’ complaints show massive increases in generic drug costs between July 2013 and December 2014. Tetracycline capsules, for instance, rose from 5 cents per unit to $8.53 per unit — an increase of nearly 18,000 percent.

Extending inflationary rebates to generic drugs would save state Medicaid programs $750 million over 10 years, with the federal government saving $1 billion, or roughly 57 percent of its contribution to Medicaid, Sanders’ aide says.

Though this rebate is included in President Barack Obama’s fiscal year 2016 budget, there is not a timeline for getting the bills to the House and Senate floors, as the lawmakers have been unable to secure Republican support. The lawmakers hope that public support for keeping drug costs down will eventually put enough pressure on the GOP to pass the bill.

Read the bill at www.fdanews.com/05-19-15-genericpricesbill.pdf. — Lena Freund