HHS Reacts To Court Ruling On Medicaid Reimbursements For Generic Drugs

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Litigation / Medical Malpractice
Article Date: 20 Dec 2007 - 5:00 PDT

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HHS is seeking to limit the scope of a judge's decision last week to temporarily halt Medicaid from implementing a new formula for drug reimbursements to pharmacies so that it does not alter the way drug makers calculate rebates to state Medicaid programs, Dow Jones reports (Wisenberg Brin, Dow Jones, 12/18). U.S. District Court Judge Royce Lamberth in Washington, D.C., on Friday granted a preliminary injunction that prohibits HHS from adopting a new method for calculating the average manufacturer price for prescription drugs covered by Medicaid.

The rule would have redefined the AMP for brand-name and generic medications. States use AMPs to calculate Medicaid reimbursement rates for medications. According to CMS, the rule would have saved the federal government and states $8.4 billion over the next five years (Kaiser Daily Health Policy Report, 12/18).

HHS argues that the injunction should not prevent Medicaid from using the new AMP data to calculate rebates that drug makers must pay states for prescription drugs under Medicaid. The agency believes that if manufacturers continue to use the old method for calculating AMPs, a "significant and costly alteration of the status quo" would result (Dow Jones, 12/18).

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