June 13, 2019

Senators Hassan, Cassidy Lead Bipartisan Group of Senators in Introducing Legislation to Close Loophole that Allows Pharmaceutical Companies to Overcharge Taxpayers

WASHINGTON – Senators Maggie Hassan (D-NH) and Bill Cassidy (R-LA) led a group of Senators in introducing the bipartisan Fair and Accurate Medicaid Pricing (AMP) Act of 2019 to close a loophole in the Medicaid rebate program that results in big pharmaceutical companies overcharging taxpayers. Due to the loophole, drug companies can underpay Medicaid rebate costs owed to state programs, leading states to incur higher costs for prescription drugs. Senators Debbie Stabenow (D-MI), John Cornyn (R-TX), Ben Cardin (D-MD), and Todd Young (R-IN) also joined in introducing the bipartisan legislation.

“Closing this loophole will force big pharmaceutical companies to pay their fair share to Medicaid programs in New Hampshire and across the country, and ensure that taxpayers aren’t getting overcharged for this critical program,” Senator Hassan said. “I urge my colleagues on both sides of aisle to support the bipartisan Fair and Accurate Medicaid Pricing (AMP) Act of 2019  so that we can work to hold pharmaceutical companies accountable and save taxpayer dollars.”  

“If I go to church and there’s a Bernie Sanders supporter pulling on one of my lapels and a Donald Trump supporter pulling on the other, they are talking about the high cost of prescription drugs,” Dr. Cassidy said. “Gimmicks are used to increase the costs of drugs which means you and I pay more as patients and more as taxpayers. I am working on legislation with the idea that the taxpayer and patient pay less, while still rewarding innovation.”

“It is outrageous that Big Pharma is using this loophole to overcharge consumers,” Senator Stabenow said. “I will continue leading efforts with my colleagues on both sides of the aisle to hold Big Pharma accountable.”

“Texans shouldn’t have to be overcharged in Medicaid because of manufacturers gaming the rebate system,” Senator Cornyn said. “By closing this loophole, we can lower prices for Medicaid recipients and ensure states don’t have to pick up the tab.”

“Greater transparency is essential to ensure that drug manufacturers are no longer able to intentionally undervalue their products to reduce their obligations to state Medicaid programs.” Senator Cardin said.

“At a time when Hoosiers are struggling to afford their prescription drugs, it is disheartening to see some pharmaceutical companies taking advantage of hardworking taxpayers through a loophole. I am proud to join my bipartisan colleagues in holding these companies accountable and stopping this practice from continuing,” Senator Young said.

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.

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