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Medicaid Rebate Program Reform: What It Really Means for Drug Manufacturers

On Feb. 8, 2006, President Bush signed the Deficit Reduction Act (DRA) into law. Title VI imposes changes to the formula for state reimbursement of prescription drugs and changes to the Medicaid rebate program. These changes will have a significant impact on drug manufacturers, increasing rebate liability, impacting reporting obligations and resources required for compliance with the law, and affecting sales and business practices. In addition, Health and Human Services’ regulations on the methodology for calculating average manufacturer price (AMP) will create a new basis for enforcement actions and expose manufacturers to greater liability for noncompliance…