NY Medicaid program to inspect drugmakers who don't share discounts

New York state in April enacted new laws to address high drug costs as part of the state's budget, reports Kaiser Health News.

Under the new rules, drugmakers that don't voluntarily offer rebates to the state when Medicaid drug spending quickly increases may be subject to regulatory review, according to the report.

During the reviews, regulators will evaluate the price of a medication in relation to its medical benefit — along with a drugmaker's profit margins — to decide if the treatment is overpriced, according to the report. To avoid a review, drugmakers must agree to offer additional discounts to Medicaid.

The rules are also the first to set an annual cap on Medicaid drug spending, according to the report. The state seeks to limit total payments to the "sum of medical inflation plus 5 percent," reports KHN.

"It clearly is going to put more pressure on manufacturers to address prices if they want to stay in business in New York," Jack Hoadley, a health policy analyst who studies Medicaid at Washington, D.C.-based Georgetown University, told KHN.

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