Completed Work on Reimbursement Policy

Historically, brand-name drugs were subject to additional Medicaid rebates when their prices rose faster than inflation, but this policy did not apply to generic drugs. In Average Manufacturer Prices Increased Faster Than Inflation for Many Generic Drugs (A-06-15-00030), OIG found that price increases for generic drugs exceeded the specified statutory inflation factor applicable to brand-name drugs for 22 percent of the quarterly average manufacturer prices we reviewed. We calculated that Medicaid would have received a total of $1.4 billion in additional rebates for the top 200 generic drugs, ranked by Medicaid reimbursement, from 2005 through 2014 if the inflation-indexed provision was extended. On November 2, 2015, the Bipartisan Budget Act of 2015 was enacted and included provisions extending the additional rebate to generic drugs, which will apply to rebate periods beginning with the first quarter of 2017.