Drugmakers may see Medicaid rebate cap rise or go away: MACPAC

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Jason Ranville Senior Manager, Health Research Institute, PwC US March 15, 2019

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An influential independent commission that advises Congress on Medicaid policy is considering recommending the cap on rebates for pharmaceuticals be raised or removed, according to a recent meeting of the Medicaid and CHIP Payment and Access Commission (MACPAC) attended by HRI.

During this session, MACPAC considered a proposal to lift the rebate cap under the Medicaid Drug Rebate Program from 100 percent of the drug’s average manufacturer price (AMP) to 125 percent. The commission also is considering removing the cap. MACPAC will vote on each of the proposals during its meeting in April and will make formal recommendations to Congress in June.

HRI impact analysis

MACPAC’s rebate proposal would affect a relatively modest slice of drugs with rebates that have hit 100 percent of AMP, a situation the commission said encourages hefty price hikes. According to the commission, 18.5 percent of brand drugs reached the rebate cap during the fourth quarter of 2015.

The commission estimates raising the cap to 125 percent of AMP would save $5 billion to $10 billion over 10 years. Removing it would save $15 billion to $20 billion. One potential consequence of changing the cap, the commission also noted, could be to encourage drugmakers to launch products with higher list prices or to shift costs to other payers.

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Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Alexander Gaffney

Senior Manager, Health Research Institute, PwC US

Tel: +1 (202) 836 1604

Jason Ranville

Senior Manager, Health Research Institute, PwC US

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