Medicaid would have saved $1.4B with discounts for generics: Report

Sen. Bernie Sanders (I-VT)

Sen. Bernie Sanders (I-VT) and Rep. Elijah Cummings (D-MD) have added some ammo to their drug price-fighting arsenal. A new federal report shows that Medicaid could have saved $1.4 billion over the last 10 years if companies were forced to offer discounts if prices for top-selling generic drugs surpassed the rate of inflation.

Last year, Sanders and Cummings asked the Office of the Inspector General (OIG) of the U.S. Department of Health & Human Services to look at how much Medicaid would save if generic companies had to provide rebates. The OIG found that prices for generic drugs regularly exceeded the rate of inflation between 2005 and 2014. If companies offered rebates for the top 200 generic meds, Medicaid could have saved more than $39 million in 2005 and $464 million in 2014, according to the latest report.

"The United States is the only major country on earth that does not in one form or another regulate prescription drug prices and the results have been an unmitigated disaster," Sanders said in a statement. "This report further demonstrates that we need a new approach to stop skyrocketing drug prices in this country."

One tactic for reducing generic drug prices could be government intervention, and Sanders and Cummings are already getting the ball rolling on this approach. The pair recently celebrated a victory after passage of a bill they are pushing that would force generic companies to offer state Medicaid programs discounts linked to inflation from 2017 onward, something already required of branded drugs.

Maryland Rep. Elijah Cummings

Unsurprisingly, the generics industry is not pleased with the OIG's latest report. A Medicaid rebate would "add significant hurdles to generic drug investment and development" and ultimately hurt patients, Chip Davis, a spokesman for the Generic Pharmaceutical Association (GPhA), wrote in a blog post. Plus, generic drugs have saved the U.S. $1.68 trillion over the last 10 years, Davis said, citing a report from the IMS Institute for Healthcare Informatics prepared for the GPhA.

But the OIG report points to an overarching problem, Cummings said in a statement, as prices for both generic and branded drugs continue to increase and spark backlash from payers and the public. "The OIG report confirms that skyrocketing drug prices are not just an isolated problem caused by one or two CEOs motivated by greed, but a systemic injustice that enriches corporate executives at the expense of Americans in desperate need of their medications," Cummings said.

- read the report (PDF)
- get the statement
- here's the blog post

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