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The Impact of Authorized Generics on Medicaid Drug Rebates

In its final rule implementing provisions of the Affordable Care Act that apply to the Medicaid Drug Rebate Program, CMS directed primary manufacturers to include in their calculation of average manufacturer price (AMP) the sale of authorized generic drugs to secondary manufacturers in some circumstances (42 CFR 447.506(b)). Prior OIG work has shown that including these sales in AMP calculations may greatly reduce the AMP. A lower AMP then leads to lower Medicaid rebates. We will examine selected drugs with authorized generics and determine how including the sales of authorized generic drugs to secondary manufacturers affects Medicaid drug rebates.

Announced or Revised Agency Title Component Report Number(s) Expected Issue Date (FY)
May 2018 Centers for Medicare & Medicaid Services The Impact of Authorized Generics on Medicaid Drug Rebates Office of Audit Services W-00-18-31499 2019