This overview is excerpted from Manatt on Health, Manatt’s subscription service that provides in-depth insights and analysis focused on the legal, policy and market developments.
On May 15, the Centers for Medicare & Medicaid Services (CMS) issued a statement saying that it would not finalize the “stacking” proposal in its Medicaid Drug Rebate Program proposed rule—the remaining provisions are expected to be finalized soon.
The “stacking” issue impacts how manufacturers calculate Medicaid best price, which is a key input in determining the level of rebates manufacturers pay to Medicaid programs. In some cases, a manufacturer offers different discounts to different organizations in the supply chain on the same drug. In its proposal, CMS said that manufacturers are required to add up the discounts provided to different legal entities to determine the best price offered, contrary to the practice of some manufacturers who calculate best price as the lowest price offered to any individual purchaser. While CMS described the proposed language as a “clarifying statement” that reflected long-standing policy, many manufacturers said that the stacking obligation represented a profound change in calculating best price, with some manufacturers estimating the proposed change would significantly increase the rebate dollars they owe to Medicaid.
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