Prescription Drugs
Congress Should Support Legislation to Modernize the Medicaid Drug Rebate, Maintain Quality of Care, and Provide Federal Savings to Pay for Health Care Reform
Request - The Drug Rebate Equalization Act of 2009
As Congress and the states struggle to control the skyrocketing costs of Medicaid and find funding to reauthorize the SCHIP program, the Association for Community Affiliated Plans (ACAP) supports a solution that will save the Federal Government $11 billion over ten years, according to CBO. This policy would equalize the treatment of prescription drug discounts between Medicaid managed care and Medicaid fee-for-service. In offering Medicaid managed care plans access to the Medicaid drug rebate, Congress will provide relief for federal and state budgets, thereby mitigating the need for added cuts to Medicaid benefits or populations, and for drug carve outs, which negatively impact clinical care for Medicaid enrollees. The Congressional Budget Office has scored the DRE as saving $11 billion over ten years. This proposal has been introduced in the 111th Congress by Representative Stupak as H.R. 904, and in the Senate by Senator Bingaman as S. 547. It was also included in the Senate version of the bill that became the Deficit Reduction Act of 2005.
Background
Created by the Omnibus Budget Reconciliation Act (OBRA) of 1990, the Medicaid Drug Rebate Program requires a drug manufacturer to have a rebate agreement with the Secretary of the Department of Health and Human Services for states to receive federal funding for outpatient drugs dispensed to Medicaid patients. At the time the law was enacted, managed care organizations were excluded from access to the drug rebate program. In 1990, only 2.8 million people were enrolled in Medicaid managed care and so the savings lost by the exemption were relatively small. Today, 21 million people are enrolled in capitated managed care plans. Because managed care organizations emphasize lower-cost generics and also effectively manage drug utilization, pharmacy costs in the FFS Medicaid setting are often higher on a per member per month basis than in the managed care setting even though plans are at a disadvantage with respect to the federal rebate.
Prescription Drugs
Congress Should Support Legislation to Modernize the Medicaid Drug Rebate, Maintain Quality of Care, and Provide Federal Savings to Pay for Health Care Reform
Request - The Drug Rebate Equalization Act of 2009
As Congress and the states struggle to control the skyrocketing costs of Medicaid and find funding to reauthorize the SCHIP program, the Association for Community Affiliated Plans (ACAP) supports a solution that will save the Federal Government $11 billion over ten years, according to CBO. This policy would equalize the treatment of prescription drug discounts between Medicaid managed care and Medicaid fee-for-service. In offering Medicaid managed care plans access to the Medicaid drug rebate, Congress will provide relief for federal and state budgets, thereby mitigating the need for added cuts to Medicaid benefits or populations, and for drug carve outs, which negatively impact clinical care for Medicaid enrollees. The Congressional Budget Office has scored the DRE as saving $11 billion over ten years. This proposal has been introduced in the 111th Congress by Representative Stupak as H.R. 904, and in the Senate by Senator Bingaman as S. 547. It was also included in the Senate version of the bill that became the Deficit Reduction Act of 2005.
Background
Created by the Omnibus Budget Reconciliation Act (OBRA) of 1990, the Medicaid Drug Rebate Program requires a drug manufacturer to have a rebate agreement with the Secretary of the Department of Health and Human Services for states to receive federal funding for outpatient drugs dispensed to Medicaid patients. At the time the law was enacted, managed care organizations were excluded from access to the drug rebate program. In 1990, only 2.8 million people were enrolled in Medicaid managed care and so the savings lost by the exemption were relatively small. Today, 21 million people are enrolled in capitated managed care plans. Because managed care organizations emphasize lower-cost generics and also effectively manage drug utilization, pharmacy costs in the FFS Medicaid setting are often higher on a per member per month basis than in the managed care setting even though plans are at a disadvantage with respect to the federal rebate.
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| 2/26/09 President Obama's Budget Expands Health Coverage for More Americans and Modernizes the Medicaid Drug Rebate | Download |
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| 9/22/08 Analysis of Drug Rebate Equalization Act's Savings to the Medicaid Program | Download |
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| 9/22/08 Analysis of Dual Eligible Pharmacy Costs Under Medicaid and Medicare Part D | Download |
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| 10/24/07 Programmatic Assessment of Carve-In and Carve-Out Arrangements for Medicaid Prescription Drugs | Download |
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| 6/11/07 S.1589 | Download |
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| 4/18/07 FAQs on Drug Rebate | Download |
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| 3/5/07 Drug Rebate One Pager | Download |
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| 5/29/03 Extending the Federal Drug Rebate Program to Medicaid MCOs: Analysis of Impacts | Download |
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| 1/1/03 Comparison of Medicaid Pharmacy Costs and Usage between the Fee-for-Service and Capitated Setting | Download |
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