Manufacturer Responses to the Medicaid Drug Rebate Cap Removal

To obtain Medicaid coverage for their drugs, Federal law generally requires pharmaceutical manufacturers to enter into rebate agreements with CMS and pay rebates to States and the Federal government. Before 2024, a drug's rebate was capped at 100 percent of its average manufacturer price, meaning that a manufacturer could not owe more in rebates than it charged wholesalers and retail community pharmacies, on average, for the drug. The American Rescue Plan Act removed the rebate cap beginning on January 1, 2024, and in response, manufacturers reacted in ways that could significantly impact cost and access. OIG will conduct two studies exploring the number of drugs affected by the rebate cap removal, the range of manufacturer responses to its removal, and the effect these responses had on Medicaid, Medicare Part D, and enrollees of both programs.

Announced or Revised	Agency	Title	Component	Report Number(s)	Expected Issue Date (FY)
June 2025	CMS	Manufacturer Responses to the Medicaid Drug Rebate Cap Removal	Office of Evaluation and Inspections	OEI-BL-25-00220; OEI-05-25-00230	2026