The American Rescue Plan Act removed the 100% average manufacturer price (AMP) cap for Medicaid rebates, effective Jan. 1, 2024, requiring manufacturers to pay the full additional rebate amount for drugs with AMPs that significantly outpaced the rate of inflation. An analysis presented at the AMCP 2025 Annual Meeting showed that despite declines in rebates, there was no change in brand-over-generic strategies for the 10 states studied.
The study estimated the change in Medicaid statutory rebates due to list price reductions and sought to identify any changes to brand-over-generic strategies.
The researchers used First Data Bank to identify branded drugs with wholesale acquisition costs (WAC) that decreased by at least 30% in December 2023 or January 2024. Medicaid statutory rebates were estimated for the first two quarters of 2023 and 2024 by adding the basic rebate to the inflationary penalty, if applicable.
The study excluded brand drugs without:
- Manufacturer-reported U.S. net sales; and
- Generic or biosimilar competition in 2023.
The study reviewed Medicaid formularies from 2023 and 2024 for the 10 states with the largest Medicaid health care expenditures and assessed preferred drug lists for brand-over-generic strategies.
Twelve brand product lines with list price reductions were identified, and five drugs met the inclusion criteria:
- Advair;
- Symbicort;
- Humalog;
- NovoLog;
- Lantus.
For all product lines, the estimated Medicaid statutory rebates decreased from 95% of WAC (the AMP cap) in 2023 to less than 80% of WAC in 2024. Four product lines decreased to less than 60% of WAC. All brand drugs within the included product lines maintained their coverage status on all 10 state Medicaid formularies from 2023 to 2024.
“Despite a decrease in estimated Medicaid statutory rebates following list price reductions, no changes to the brand-over-generic strategies of the 10 reviewed state Medicaid formularies were identified,” the author concluded.
Reference
Quillen SM. Evaluating Medicaid brand-over-generic formulary strategies following the AMP cap removal. Abstract U17. Presented at AMCP 2025; March 31–April 3, 2025; Houston.
