HEALTH REFORM: CMS Issues Proposed Rule Relating to Manufacturer Rebates and Reimbursement Amounts for Outpatient Prescription Drugs Dispensed to Medicaid Beneficiaries

This issue of Implementing Health & Insurance Reform summarizes and discusses some issues raised by the proposed rule ("Proposed Rule") that the Centers for Medicare & Medicaid Services ("CMS") published on February 2, 2012, to implement changes to the Medicaid Drug Rebate Program ("MDRP") and to reimbursement limits for outpatient drugs covered by Medicaid.

In Part 1, we discuss proposals relating to the MDRP that would change the manner in which pharmaceutical manufacturers calculate Average Manufacturer Price ("AMP") and Best Price for Medicaid-covered outpatient drugs and the manner in which rebates that manufacturers pay on prescriptions of those drugs dispensed to Medicaid beneficiaries are calculated. The topics covered include: the sales and price concessions manufacturers would include in their calculate AMP calculations, as well as those that would be excluded; the alternate methodology manufacturers would use to calculate AMP for so-called "5i" drugs not generally dispensed in retail community pharmacies; the calculation of Medicaid rebates for line extensions of other drugs; and new reporting obligations for manufacturers. CMS is accepting comments on the Proposed Rule until April 2, 2012.

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