Medicaid proposal would let states figure base prices

Medicaid drug pricing has long been a complicated, murky area. So murky, in fact, that drugmakers found themselves party to dozens of lawsuits alleging that they'd inflated wholesale prices reported to the government program, collecting millions more for drugs than the pricing rules allowed.

Now, a new Centers for Medicare and Medicaid Services rule would unhook Medicaid reimbursements from companies' self-reported wholesale prices. States will be allowed to collect their own wholesale-pricing information from pharmacies, and base their reimbursements on those figures instead. As the Boston Herald reports, the feds project savings of $17.7 billion from the change, along with new, higher rebates over the next 5 years.

The proposed rule, issued to comply with the Affordable Care Act, was inspired by a program used in Alabama. Medicaid officials there rounded up wholesale prices from pharmacies to figure their own averages based on bills those pharmacies actually paid. The state estimates it saved $30 million in one year from the change. Three other states imitated Alabama's efforts, and now, the federal government wants to make it easier for all states do the same thing--and to help the states collect their pricing data by setting up a nationwide database.

The rules proposal also specifies new rebate increases for Medicaid, to 13% from 11% on generics and to 23.1% from 15.1% on branded meds, as specified by the healthcare reform law. The CMS is seeking comment on the rule proposals through next month, with final rules coming in 2013.

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