States Concerned About Rebate Losses

As states voice growing concern about the possible redirection of negotiated rebates on drug prices; the federal government recently confirmed that some of money will be paid to the feds to help fund the health care overhaul. The new law mandates that state rebates for brand name drugs be increased from 15.1% to 23.1%. The rebate dollars that fall between those percentages will be redirected to the federal government.
Many states had already negotiated rebate prices that exceeded the 15.1% and are concerned that now they will lose those negotiated rebates to the federal government. Rebates that fall below 15.1% and above 23.1% will be shared between the states and Washington.
Federal officials are confident that losses by the states will be made up for by other changes to the Medicaid programs. After taking into account the savings from program changes many states are still projecting losses with California estimating $50 million per year that will be redirected to the federal government. The federal agency that oversees the Medicaid program admits to now knowing the exact financial impact on states but maintains that the state estimates are excessive and that they are not fully accounting for the reduced costs that will result from the changes.