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Medicaid Could Save Hundreds of Millions by Excluding Authorized Generic Drug Transactions to Secondary Manufacturers from Brand Name Drugs’ Average Manufacturer Price Calculations

04-29-2019 | Audit (A-06-18-04002) | Complete Report | Report in Brief
Why OIG Did This Review

The 2017 U.S. Department of Health and Human Services (HHS) Budget in Brief states that excluding authorized generics from average manufacturer price (AMP) calculations could save the Federal Government $20 million per year. A prior Office of the Inspector General (OIG) report indicated that this is a low estimate.

Our objective was to determine the impact on Medicaid drug rebates from including authorized generic drug transactions in the brand name drugs’ AMP calculations.
How OIG Did This Review

Our review covered nine brand name drugs that included authorized generic drugs to secondary manufacturers in their AMP calculations. The nine brand name drugs included 40 nine-digit national drug codes that made up approximately 45 percent of the total Medicaid dollars reimbursed for drugs with authorized generics for 2017.

After the manufacturers provided the AMP data for each drug, we verified the data, removed the authorized generic transactions, and recalculated the AMP. Next, we recalculated rebate amounts based on the recalculated AMP. We compared the recalculated rebates to the original rebates to determine the impact on Medicaid rebate amounts for the nine drugs.
What OIG Found

By including authorized generic drug transactions to secondary manufacturers in the brand name drug’s AMP calculations, Medicaid received 46 percent less in rebates than it otherwise would have for the nine brand name drugs we reviewed, amounting to $595 million for calendar year 2017.
What OIG Recommends and CMS Comments

We recommend that CMS seek legislative change to exclude authorized generic drug transactions to secondary manufacturers from the AMP calculation of the brand name drug, which may increase manufacturer Medicaid rebate obligations by hundreds of millions each year.

CMS concurred with our recommendation. CMS stated that it informs HHS of OIG recommendations for legislative change through the development of the President’s Budget. CMS noted the President’s Fiscal Year 2020 Budget includes a legislative proposal to exclude the authorized generic sales from the primary manufacturer’s average price.

Filed under: Centers for Medicare and Medicaid Services

Quote (Thor123422 @ May 5 2019 04:23pm)

Start with what the oig is and why I should care

Quote (tagged4nothing @ May 5 2019 04:04pm)

going to use this thread to post this + future deeds of the OIG.

https://oig.hhs.gov/oas/reports/region6/61804002.asp

what you all think? good step?

Quote (Thor123422 @ 5 May 2019 17:23)

Start with what the oig is and why I should care

Quote (excellence @ 6 May 2019 01:55)

you shouldn’t care as you take more from the government than what you put in despite being a privileged lefty

its not a surprise someone who got intellectually bamboozled by flat-earther doesn’t know what the oig is

*LAUGH OUT LOUD*

e: reported, btw

Quote (Saucisson6000 @ May 6 2019 06:09am)

Not everyone got raised by a clowndog doing personal attacks 24\7 on d2jsp :)

Quote (Ghot @ 6 May 2019 11:20)

What exactly... is a "clowndog"?
Is this some French version of a horrible put down?

Quote (tagged4nothing @ 5 May 2019 22:04)

going to use this thread to post this + future deeds of the OIG.

https://oig.hhs.gov/oas/reports/region6/61804002.asp

what you all think? good step?

Quote (Saucisson6000 @ May 6 2019 05:34am)

There's no french version, but yep, you got it, it's something horrible.



Btw should be nice if you could list the amount of people (in millions) losing their healthcare in 2019, 2020 etc