The federal government announced Friday a final rule that limits how much it will pay state Medicaid agencies for prescription drugs.
The regulation, which aims to curb inflated drug pricing at the state level, will save states and the federal government as much as $8.4 billion over the next five years, according to the Centers for Medicare & Medicaid Services. Even with the rule, which CMS entered in the Federal Register, the United States will spend $140 billion on Medicaid drugs over the same period.
"This new payment formula allows Medicaid to pay more appropriately for prescription drugs dispensed to Medicaid beneficiaries," CMS Acting Administrator Leslie Norwalk said in a press release.
The ruling comes on the heels of reports by the Government Accountability Office and the Office of the Inspector General, which found that many pharmacies charge state Medicaid programs commercial rates for generic drugs, much more than what the pharmacies pay for them.
"(The rule) will yield a payment level that will be sufficient to assure widespread availability of drugs for Medicaid patients," Norwalk said. She added that total pharmacy revenues under the change would decline by less than 1 percent.
The new final rule is a change to the Deficit Reduction Act of 2005.
While CMS cannot legally disclose information on average manufacturers price (AMP) for the generics, the agency is soliciting industry comments on the definition of the term and the factors in its calculation as the rule is published.