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3 Ways Proposed CMS Rule Could Cut Costs, Increase Transparency in Medicaid Prescription Drug Pricing

A proposed rule to cut costs and increase transparency in Medicaid prescription drug pricing could save states and taxpayers an estimated $17.7 billion over five years, CMS administrators say.

The new Medicaid prescription drug provisions will increase transparency in drug pricing and ensure taxpayers and states are not overpaying for prescription drugs, according to the CMS.

The proposed regulation includes the following three cost reduction improvements:

  • Aligning reimbursement rates to better reflect the actual price the pharmacy pays for the drug;
  • Increasing rebates paid by drug manufacturers that participate in Medicaid, and;
  • Providing rebates for drugs dispensed to individuals enrolled in a Medicaid managed care organization.

Several states have implemented similar initiatives to inject fairness into prescription drug pricing. Alabama, for example, estimates a savings of $30 million in one year alone from an initiative to better understand and align reimbursements with the prices pharmacies pay for prescription drugs.

In 2009, Medicaid spent $15.8 billion on prescription drugs.

The Medicaid Pharmacy Regulation notice of proposed rulemaking can be found at the Federal Register.

The proposed rule was published in the Federal Register on February 2, 2012. The comment period will close on April 2, 2012. Stakeholders will have 60 days from the publication date to submit public comments. CMS plans to issue a final rule in 2013.


Source: CMS, January 27, 2012

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