PPACA Prescription Rebate Plans Taps State Medicaid Funding
A new prescription drug rebate formula found in the health reform bill (the Patient Protection and Affordable Care Act, or "PPACA") is designed to lower the costs of drugs sold to state Medicaid programs - unfortunately, instead of saving the states money, the provision may actually strip additional funds from several states' already cash-strapped coffers.
Specifically, the health law contains a provision designed to raise $38 billion over the next ten years by requiring drugmakers who sell to Medicaid to further discount their prices. While such "rebates" were previously divided between the states and the federal government, under PPACA a significant portion of the rebates will now go solely to the feds.
While some states may be able to offset these losses, PPACA may spell trouble for others - for example, according to California's deputy Medicaid director, the state may lose $50 million next year because of the revisions. Indiana's secretary of the Family and Social Services Administration estimated that losses for her state may amount for $400 million over 10 years.
Currently, drug firms must offer Medicaid programs a 15.1 percent rebate for most brand-name medications. Under PPACA however, the rebate is increased to 23.1 percent, and now includes certain generics. The changes are slated to take effect October 1 of this year.
