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Senate Passes Bipartisan Hassan-Cassidy Legislation to Close Medicaid Rebate Loophole That Benefits Big Pharma At Expense of Taxpayers

WASHINGTON – The bipartisan Fair and Accurate Medicaid Pricing (AMP) Act, led by Senators Maggie Hassan (D-NH) and Bill Cassidy (R-LA), to close a loophole in the Medicaid rebate program that results in big pharmaceutical companies overcharging taxpayers was included in the continuing resolution budget package passed by the Senate today. The legislation is now headed to the President’s desk.

Due to the loophole, drug companies can underpay rebates owed to state Medicaid programs, increasing state and federal costs for prescription drugs. The bipartisan legislation will save taxpayers approximately $3.1 billion over the next 10 years.

“Big pharmaceutical companies are making huge enough profits without unnecessary loopholes that come at the expense of the taxpayer,” Senator Hassan said. “I am glad our bipartisan, commonsense legislation to hold pharmaceutical companies accountable and save taxpayer dollars was included in the funding package, and I look forward to seeing it become law.”

“This is a victory for Louisiana Families and for Louisiana and American taxpayers. The bill is heading to President Trump’s desk,” said Senator Cassidy, M.D. “This will fix a rigged system allowing companies to price gouge taxpayers and patients.”

The amount that a company is required to pay state governments in rebates through the Medicaid program is determined by a measure called the Average Manufacturer Price. Right now, pharmaceutical companies can manipulate the Average Manufacturer Price by including the price of both branded drugs and authorized generic drugs in the calculation. The bipartisan Fair and Accurate Medicaid Pricing (AMP) Act of 2019 would close that loophole by removing authorized generics, which are typically less expensive than brand drugs, from being used in the company’s calculations. The bill is also cosponsored by Senators Debbie Stabenow (D-MI), John Cornyn (R-TX), Ben Cardin (D-MD), and Todd Young (R-IN).