Plan Would Impose California Price Reporting Obligations on Drug and Biologics Manufacturers

California Governor Jerry Brown has released a draft set of amendments to the state’s Medi-Cal code that would add “average acquisition price” (AAP) to the set of data from which Medi-Cal pharmacy reimbursement is determined. The proposed amendments also open the door to unspecified price reporting obligations to California along the lines of those in Texas, New Mexico, Vermont and Maine.

The proposal would peg California ingredient reimbursement at a state calculated pharmacy acquisition cost plus some markup. If enacted, it is likely to generate budget savings by the state and could therefore be a precedent for other state activity in this area. Currently Alabama, Oregon and (arguably) Texas utilize cost-plus Medicaid reimbursement schemes. All other Medicaid programs base reimbursement on AWP or WAC. A recent letter from HHS Secretary Sebelius advocated that states reexamine their reimbursement methodologies to find Medicaid drug savings, specifically mentioning Alabama and the forthcoming national survey on actual acquisition costs.

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