September 14, 2010—The Centers for Medicare and Medicaid Services (CMS) have decided that just one drug – MedImmune's Synagis (palivizumab), which is used to prevent serious lung infections in infants – meets the criteria for the new lower Medicaid rebate established for pediatric drugs under health care reform.
The decision, which CMS announced in an Aug. 16 guidance document published on its Web site, will affect both the size of the Medicaid rebate amount and the 340B discount on the drug, which generally is administered in five monthly injections beginning in late autumn. A drug's 340B ceiling price generally is its AMP minus its Medicaid unit rebate amount.
Minimum Rebate Raised
The Affordable Care Act (ACA) raised the minimum Medicaid rebate on most brand-name drugs from 15.1 percent to 23.1 percent and on generics from 11 percent to 13 percent. But it also established a lower 17.1 percent of AMP rebate category for brand name drugs approved by the Food and Drug Administration (FDA) "exclusively for pediatric indications" and for blood clotting factor as well.
CMS identified 21 clotting factor products encompassing 65 National Drug Code (NDC) numbers as falling within the new AMP classification. The products were included, CMS said, because they receive "a separate furnishing payment" under Medicaid.
But CMS found that Synagis alone, which is distributed in 100 and 50 milligram vials, met the FDA definition of a drug "only for pediatric use for children from birth to 16 years of age." It invited readers to contact it if they were aware of any other drugs that met the FDA's definition.
Mixed News for Providers
The decision to apply the 17.1 percent rebate amount to only one pediatric drug will likely benefit 340B providers and state Medicaid programs insofar as all other brand name drugs for pediatric indications that also have adult uses will be subject to the new, higher 23.1 percent rebate amount. On the other hand, the fact that a number of clotting factor products will have a lower rebate rate is a disappointment for cash-strapped safety-net providers and states.