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Medicaid could receive larger rebates from drugmakers beginning in 2024 under legislation signed Thursday by President Joe Biden so large that some pharmaceutical companies could essentially end up paying states to use their drugs.
The provision is tucked into the massive $1.9 trillion pandemic relief package and eliminates what s known as the Medicaid penny rule. The obscure law has limited the mandatory rebates drugmakers pay to Medicaid to 100% of the average manufacturer price, or what wholesalers are charged after initial discounts. In the event required rebates total up to the average manufacturer price or higher, the price per unit is set to $0.01.