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Elimination of Medicaid Rebate Cap in the Latest COVID-19 Relief Package—The First Legislative Action on Drug Pricing Under the Biden Administration | White & Case LLP


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The American Rescue Plan Act of 2021, the US$1.9 trillion stimulus package expected to be passed by Congress and signed into law by President Biden by March 14, 2021, contains the first drug pricing legislative action being taken under the new Biden administration.
The American Rescue Plan Act of 2021 includes a provision that eliminates the statutory cap on rebates drug manufacturers pay to Medicaid. These rebates act as a discount off the purchase price and eliminating the cap means that drug company discounts paid to Medicaid can rise. Prior to this change, drug manufacturers could have paid up to 100 percent of the Average Manufacturer Price in rebates to state Medicaid programs for Medicaid-covered drugs. ....

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