Merkley: Health Reform Should Include Drug Rebate Extension

Wednesday, June 10, 2009

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 Services.

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 taxpayers. 

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.