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Treatment of Authorized Generic Drugs

An authorized generic drug is one that the manufacturer holding the title to the original new drug application permits another manufacturer to sell under a different national drug code.  Provisions in 42 CFR § 447.506(b) provide that the manufacturer holding title to the original new drug application of the authorized generic drug must include the sales of this drug in its average manufacturer price (AMP) only when such drugs are being sold by the manufacturer directly to a wholesaler.  Manufacturers that also include the sales of an authorized generic to a secondary manufacturer could lower the AMP and, consequently, a lower rebate would be paid to the State.  We will review drug manufacturers’ treatment of sales of authorized generics in their calculation of AMP for the Medicaid drug rebate program.  We will determine whether manufacturers included sales of authorized generics to secondary manufacturers in their AMP calculations.

Announced or Revised Agency Title Component Report Number(s) Expected Issue Date (FY)
Nov-16 Centers for Medicare & Medicaid Services Treatment of Authorized Generic Drugs Office of Audit Services W-00-17-31499 2017

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