September 14, 2012—Seventeen U.S. senators have asked the Centers for Medicare and Medicaid Services (CMS) to clarify that drug manufacturers can provide nominally priced pharmaceuticals to women’s health centers and family-planning clinics that do not participate in the 340B program without fear of lowering those products’ Medicaid best price.
The senators made their request in an Aug. 10 letter to CMS Acting Administrator Marilyn Tavenner.[ms-protect-content id=”2799″] One of the signers, Sen. Jon Tester (D-Mont.), released the communication in a Sept. 7 news release.
The lawmakers asked CMS to make the clarification in its forthcoming regulation implementing health care reform’s Medicaid drug rebate provisions. CMS published the proposed rule in early February but it is not known when it will issue its final regulation.
A manufacturer’s Medicaid best price on a drug determines the size of the rebate it owes to state Medicaid agencies and the size of the discount it owes to 340B covered entities. Manufacturers therefore are reluctant to provide steep discounts voluntarily to safety-net health care providers if doing so could increase their Medicaid and 340B liabilities.
Before 2005, drug manufacturers could exclude all nominal price sales (those defined as less than 10 percent of Medicaid average manufacturer price, or AMP) from their best-price calculations. In the early 2000s, state and federal investigations of manufacturers’ best price practices led to several large settlements. That, in turn, prompted Congress in 2005 to limit the best-price exclusion to nominal sales to 340B covered entities, intermediate care facilities for persons with developmental disabilities, and state owned or operated nursing homes. At the same time, Congress gave the Department of Health and Human Services discretion to expand nominal pricing to other safety-net health care providers, but the agency declined to exercise that authority.
In March 2009, Congress expanded the list of providers permitted to receive nominal pricing without affecting manufacturers’ best price to: (1) nonprofit entities that are either tax-exempt or state owned or operated and which provide the same type of services to the same types of populations as 340B covered entities; and (2) public or nonprofit entities, or entities based at an institution of higher learning whose primary purpose is to provide health care services to students in that institution, which provide family planning services.
“We hope that the final regulation can clarify that all family planning clinics and women’s health centers are able to purchase contraceptives at discounted prices,” the 17 senators said in their letter to CMS.
The 2009 legislation, they said, was passed to correct “a flaw” in the 2005 law that “resulted in fewer family planning clinics, and other women’s health centers, from receiving discounted contraceptives than Congress intended.”[/ms-protect-content]