Merkley: Health Reform Should Include Drug Rebate Extension

Washington, D.C.
– Oregon’s Senator Jeff Merkley
called on the leadership of the Senate Finance Committee today to include an
extension of the Medicaid drug rebate program to managed care plans (MCOs) in
the health reform legislation currently being drafted.

In a letter to Senator Max Baucus (D-Mont.) and Senator
Charles Grassley (R-Iowa), Senator Merkley requested that MCOs be included in
prescription drug rebate agreements with the Department of Health and Human

In Oregon, nearly 80 percent of Medicaid enrollees
participate in managed care plans.

“As we prepare to tackle health care reform, we’re going to
need to look for cost savings everywhere we can,” Merkley said.  “One
common-sense way to reduce costs is to extend prescription drug rebates to
managed care plans.  Making this change would save billions of dollars for
federal and state taxpayers over the next decade – Oregon would likely save $16
million in the next year alone.”

State Medicaid programs currently receive rebates from drug
manufacturers to ensure that Medicaid pays the lowest possible price for
brand-name drugs.  However, the rebate does not apply to drugs purchased
through MCOs.  Under current law, states often pay more for prescription
drugs for beneficiaries in managed care plans than for those in fee-for-service
Medicaid.  This inequity raises costs for federal and state

President Obama has expressed support for extending drug
rebates to include MCOs, as have the National Governors Association, the
National Association of State Medicaid Directors, the Partnership for Medicaid,
and the Medicaid health plan industry.