Reminder to Generic Manufacturers: Q1 2017 Unit Rebate Amounts Billed by State Medicaid Programs Will NOT Include Additional Discounts

Pursuant to the Bipartisan Budget Act of 2015, manufacturers participating in the Medicaid Drug Rebate Program must pay an Additional Discount on Non-Innovator products to the extent the Average Manufacturer Prices of their products are rising faster than inflation when compared to a base line period.

However, the Centers for Medicare & Medicaid Services (“CMS”) stated in April 14, 2017 e-mail correspondence to manufacturer technical contacts listed for the Drug Data Reporting for Medicaid System (“DDR”) that DDR system updates needed to automate the Additional Discount calculation on Non-Innovator products were not finalized in time and, as such, first quarter 2017 Unit Rebate Amounts for Non-Innovator products will NOT include the calculated Additional Discount, if any. As such, manufacturers are required to calculate the Unit Rebate Amounts with the Additional Discount and submit the correct first quarter 2017 Unit Rebate Amounts to the states using the Reconciliation of State Invoice (“ROSI”) form.

Arent Fox’s Health Care group closely follows developments in drug pricing requirements. Please contact Stephanie Trunk in our Washington, DC office if you have any questions regarding how to calculate the Additional Discount on Non-innovator products or implement this requirement.