Latest Senate extenders bill calls for higher Medicaid rebates from drug makers

The new Senate extenders bill would save the federal government $2.1 billion over 10 years by increasing the rebates that drug makers have to provide in the Medicaid program. The provision — Section 526 — eliminates an exemption in the healthcare reform bill to the way certain drugs' Average Manufacturer Price is calculated; since the AMP serves as the basis for calculating Medicaid rebates, increasing it also increases rebates drug makers have to provide.

"This provision is a technical correction which modifies a provision in the health reform law which was inadvertently drafted in way that excluded these certain types of prescription drugs," a Senate Finance Committee aide told The Hill.

It's not clear drug makers will see it that way, but for now they're not commenting.

"We're still reviewing the legislation including the Medicaid provision recently introduced," said a spokesman for Pharmaceutical Research and Manufacturers of America (PhRMA).

Specifically, the healthcare reform law excludes from the AMP calculation payments and rebates received from or provided to entities other than retail community pharmacies. Under the new provision, inhalation, infusion and injectable drugs that are dispensed through pharmacy benefit managers, managed care organizations, health maintenance organizations, long-term care providers and certain other non-pharmacy distributors would no longer be exempt.