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Passage of American Rescue Plan Act of 2021 Could Mean Larger Medicaid Drug Rebate Program Rebates for Pharmaceutical Manufacturers

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The American Rescue Plan Act of 2021, signed into law by President Biden on March 11, 2021, is a $1.9 trillion aid package that provides assistance to businesses and individuals experiencing financial hardship due to COVID-19.

But buried in the bill is Section 9816 which sunsets the cap on Medicaid Drug Rebate Program rebates at Average Manufacturer Price (AMP) beginning January 1, 2024.  This means that pharmaceutical manufacturers could pay Medicaid Drug Rebate Program rebates greater than AMP for Medicaid utilization in the first quarter of 2024 and after. This most likely would occur in the event AMP rises faster than inflation and could lead manufacturers to discontinue certain covered outpatient drug products or simply cease participating in Medicaid entirely.     

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