CMS final rule brings down cost of prescription drugs, hopes to save $2.7 billion

The Centers for Medicare and Medicaid Services on Thursday finalized a rule on the rebate and reimbursement of prescription drugs, a move aimed at bringing down consumer costs and which is expected to save federal and state governments an estimated $2.7 billion over five years.

CMS estimates savings of $2.7 billion from 2016 to 2020: $1.6 billion to the federal government and $1.1 billion to the states.

The savings are through increases in rebates and limits on federal reimbursements, CMS said.

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However, CMS estimates costs to drug manufacturers and states to be about $431.9 million over the next five years, it said.

"While the effects of this regulation are substantial, they are primarily a result of changes in the statute," said Health and Human Services in the rule posted on the Federal Register.

The "Covered Outpatient Drugs" final rule springs from Affordable Care Act reforms for Medicaid payments for prescription drugs. The final rule goes into effect on April 1.

The rule closes loopholes, incentivize pharmacies to use generic drugs by ensuring proper reimbursements for their cost, and gives additional tools to manage Medicaid drug costs, CMS said.

The rule is an important step in the federal government's efforts to address the rise in prescription drug costs, CMS said.

It provides detail on how reimbursements and rebates are calculated, part of CMS' broader efforts to ensure affordability of prescription drugs, while supporting pharmaceutical innovation, it said.

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The rule establishes the long term framework for implementation of the Medicaid drug rebate and reimbursement programs. The new definitions ensure that Medicaid rebates accurately account for market prices, maximizing taxpayer savings, CMS said.

"Millions of Medicaid beneficiaries rely on prescription medications to manage chronic illnesses or treat acute conditions. But recently, the cost of prescription drugs has been rising rapidly, creating fiscal pressure and potentially compromising beneficiary access" said Vikki Wachino, CMS deputy administrator and director of the Center for Medicaid and CHIP Services. "This final rule makes changes that will save taxpayers billions and ultimately improve beneficiary access to prescription drugs."

Twitter: @SusanJMorse