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PENNSYLVANIA PACE PRESCRIPTION DRUG PRICE REBATES

Executive Summary

PENNSYLVANIA PACE PRESCRIPTION DRUG PRICE REBATES would be based on best prices indexed to July 1, 1990, under an amendment the state intends to propose on April 23. If enacted with such an amendment, state legislation now under consideration would require drug manufacturers participating in the Pharmaceutical Assistance Contract for the Elderly (PACE) program to pay the state rebates sufficient to reduce its costs to best prices available on July 1, 1990, with an allowance for inflation. The amendment would distinguish the PACE bill from federal law, under which an inflation index is tied to average manufacturers prices (AMPs) available to the retail trade rather than to the best prices available to favored customers, such as large nonprofit hospitals. The state bill (HB 495) was introduced in February ("The Pink Sheet" Feb. 18, p. 5) in a form identical to federal rebate legislation enacted last autumn for Medicaid. At a hearing on the state bill ("The Pink Sheet" April 8, T&G-4), federal Senate Special Committee on Aging staffer John Coster recommended that the state shift the index from AMPs to best prices to maximize rebate revenues. Coster noted that many manufacturers have raised their best prices, which under the federal legislation are free from indexing, to decrease the amount of rebates owed Medicaid. Pharmaceutical industry executives testifying at the hearing urged that the bill be amended to require flat percentage rebates.
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PS019055

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