July 13, 2011

Brown, Wyden, McCain Introduce Affordable Medicines Utilization Act Of 2011

Bipartisan Bill Encourages States To Utilize Generic Drugs In Medicaid Program

WASHINGTON, DC – In an effort to increase consumer flexibility and save taxpayer dollars, U.S. Senators Scott Brown (R-MA), Ron Wyden (D-OR) and John McCain (R-AZ) introduced bipartisan legislation today that will encourage states to take advantage of cost-saving generic drugs.  According to a recent study, states waste more than $300 million a year just by not taking advantage of generic drug options.

The Affordable Medicines Utilization Act of 2011 offers states incentives to use generic drugs by allowing states to temporarily keep a portion of  the savings.

“This common sense, bipartisan legislation gives states and consumers more choices and saves taxpayer dollars,” said Brown.  “As Americans everywhere tighten their belts during this tough economy, the federal government needs to do the same. Our legislation is a perfect example of how the federal government can help rein in the overspending of taxpayer dollars at both the state and federal level.”

“Increasing choice and competition in the healthcare system is one of the best ways to drive down costs,” Wyden said. “This bill gives incentives to states to increase the generic drug utilization in Medicaid by letting states keep part of the difference the federal government receives between the cost of the generic drug and the cost of the name brand. This saves money for patients, the state, and injects more competition into the drug market which will help to lower costs overall.”

“With our nation in a financial crisis and as federal and state health care expenditures continue to rise, we must ensure that our health care programs are efficiently managed,” McCain said.  “A recent study found that the Federal/State Medicaid program potentially overspends by more than $300 million per year on brand-name drugs when a cheaper generic drug equivalent is available.  This bipartisan proposal incentivizes state Medicaid programs to substitute generics for more expensive brand-name drugs, introducing real competition for reimbursement dollars and saving taxpayers’ hard-earned money.”

According to a recent study from the American Enterprise Institute (AEI), states overspend more than $300 million a year due to the lack of generic drug options. States already have the ability to choose generic drugs over brand name drugs but have not reaped the full savings potential that comes from increased generic use. The ability for the states to achieve cost savings goals will increase in the next few years as the patents on many name brand drugs expires, opening the market to new generics. Because the federal government pays to the states a portion of the cost of the prescription drugs purchased through Medicaid, the federal government will see savings from increased use of less costly generic drugs. This bill gives the states a portion of the savings the federal government would have received.