Senate Appropriations Committee Votes to Increase Rebates for Brand Name Products under the Medicaid Drug Rebate Program

March 26, 2007

On March 22, 2007, the Senate Appropriations Committee approved S. 965, a bill making emergency appropriations primarily for the wars in Iraq and Afghanistan.  During the Committee’s consideration of the bill, it adopted an amendment offered by Senator Dick Durbin (D-IL) regarding the Medicaid Program.  Senator Durbin’s amendment would raise the minimum rebate amount owed by manufacturers under the Medicaid Drug Rebate Program for single source drugs and innovator multiple source drugs to 20 percent (from 15.1 percent), effective March 31, 2007.  S. 965, 110th Cong. § 2705(b) (2007).  The purpose of this increase in rebates is to pay for the other portion of Senator Durbin’s amendment, which would be a two-year moratorium on action to finalize and/or implement (1) a rule proposed by CMS, which would, among other things, limit reimbursement for health care providers that are operated by units of government to an amount that does not exceed the provider’s cost and (2) the restriction of payments for graduate medical education under the Medicaid Program.  Id. § 2705(a); CMS, Medicaid Program; Cost Limit for Providers Operated by Units of Government and Provisions to Ensure the Integrity of Federal-State Financial Partnership, 72 Fed. Reg. 2236 (proposed Jan. 18, 2007).

S. 965 has not yet cleared the full Senate –it is expected before the full Senate this week.  If Senator Durbin’s amendment remains in the version that clears the Senate, but is not in the House version, it is possible that when the conferees meet to reconcile the competing bills, this provision will be struck.  In addition, the House version includes a timetable for the withdrawal of the troops from Iraq.  President Bush has threatened to veto the bill if it is presented to him with the timetable.  Since the House version barely cleared the House, it is unlikely that there would be sufficient votes to override a veto. 


By Michelle L. Butler

Categories: Reimbursement