State Medicaid receives pharmaceutical base and inflation rebates (eMethods in Supplement 1).1,2 Until recently, rebates were capped at the mean price manufacturers sell to wholesalers (average manufacturer price [AMP]). The American Rescue Plan removed the cap in January 2024 to discourage price increases above inflation, the primary reason a drug’s statutory rebate could exceed AMP.3 This change puts manufacturers at risk of having to pay Medicaid more than what manufacturers received for selling their products to wholesalers, resulting in net losses for each Medicaid sale.4

To elucidate choices manufacturers face due to this policy change, we examined the case of Flovent, a metered-dose fluticasone propionate inhaler produced by GlaxoSmithKline (GSK). In 2002, GSK launched an authorized generic (AG) of Flovent. On the day cap removal was enacted, GSK discontinued branded Flovent.

Levy JF, Socal MP, Ballreich JM. Strategic Manufacturer Response to the Medicaid Rebate Cap Removal. JAMA Health Forum. 2024;5(11):e243624. doi:10.1001/jamahealthforum.2024.3624