Created by OBRA 1990, the Medicaid Drug Rebate Program requires drug manufacturers to have rebate agreements with the Secretary of Health and Human Services for states to receive federal funding for outpatient drugs dispensed to Medicaid patients as part of their fee-for-service programs. At the time the law was enacted, Managed care organizations (MCOs) were excluded from access to the drug rebate program. This led many states to “carve out” pharmacy benefits and run prescription drug plans through their Medicaid agency. Though this allowed states to access the drug rebates, it made it difficult for MCOs to monitor their patients’ use of prescription drugs and, in turn, hampered care coordination efforts.
ACAP Position and Legislative Action
The Drug Rebate Equalization Act (DRE), a bill to extend drug rebates to Medicaid contracted health plans, passed in 2010 as a part of the Patient Protection and Affordable Care Act, due in large part to ACAP’s policy and advocacy efforts. This policy was supported by various organizations representing state governments, Medicaid providers, and health plans. (Read letter of support here.) ACAP is committed to working with the Centers for Medicare & Medicaid Services (CMS) to implement the DRE as quickly and efficiently as possible and to ensure plan’s capitation rates appropriately reflect changes in manufacturers’ drug rebate policies. In addition, ACAP is continues to work with its member plans to understand and analyze the obstacles each state faces in the move to a “carve-in” system of pharmacy benefits.
ACAP Documents Relating to Prescription Drugs