House members look to create incentives for state use of generic drugs

Three members of the House on Thursday proposed legislation that would give states new incentives to use lower-priced generic drugs over brand-name drugs in a bid to save millions of dollars under the Medicaid program.

Rep. Charlie Bass (R-NH), along with Reps. Jo Ann Emerson (R-Mo.) and Peter Welch (D-Vt.), said the bill would reward states for substituting more expensive brand-name drugs with generics.

"The state of New Hampshire has a strong track record of saving taxpayer money in the Medicaid program through a state law that requires the state to purchase the least expensive drug available," Bass said Friday. "By giving states incentives to increase their generic drug utilization and keeping some of the savings, we can encourage other states to follow New Hampshire's lead."

Specifically, the bill would let states keep half of the money they save under the Federal Medical Assistance Percentage (FMAP) program related to the use of generics. The sponsors of the bill believe that would give states an incentive to switch to generic drugs and help keep prices down.

The bill would also give states with a 92 percent substitution rate to help implement other ways to save Medicaid dollars.

The Affordable Medicines Utilization Act, H.R. 3342, is the House companion bill to S. 1356, which Sen. Scott Brown (D-Mass.) introduced in July with Sens. John McCain (R-Ariz.), Olympia Snowe (R-Maine), and Ron Wyden (D-Ore.).