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CMS Defines A “Line Extension” Drug, Formula For Calculating Rebates

Executive Summary

As part of its proposed rule on Medicaid drugs, CMS offers a definition for a line extension drug, for which Medicaid rebate amounts were adjusted under the Affordable Care Act. The proposal reveals some challenges in identifying those drugs since rebate reports do not differentiate line extensions, prompting a process that involves cross-referencing with FDA drug approval data. CMS also offers a proposal on how to calculate rebates for line extension drugs.

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