Bipartisan Bill Introduced to Encourage Generic Drug Use in Medicaid

A bill introduced by Senators Scott Brown (R-MA), Ron Wyden (D-OR), and John McCain (R-AZ) on July 13, 2011, aims to encourage states to reduce Medicaid spending by offering financial incentives to substitute generic drugs for branded ones where possible. The bill, called the Affordable Medicines Utilization Act of 2011, encourages generic-drug substitution under Medicaid by allowing states to keep a portion of the savings they realize.

A report issued by the American Enterprise Institute for Public Policy Research estimates that states overspent by more than $3 million by not using generic drugs where available. The report predicts that savings from generic drugs will increase in 2011–2012 when other widely used drugs lose patent protection. Brown, in a press release, called the bill “common sense.” In the same press release, McCain added, “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.”

Supporters of generic drugs came out in favor of the bill. Bob Billings, executive director of the Generic Pharmaceutical Association, said in a press release, “This legislation is exactly the kind of solution those in Washington should look to when searching for ways to rein in our country’s health care spending.”

Teva Pharmaceuticals also expressed its support for the measure. “As the largest provider of generic pharmaceuticals in the United States, Teva has been and continues to be committed to providing patients with access to the life-saving medicines they need,” the company said in a press release. “This legislation will encourage states to increase access to high-quality, low-cost pharmaceuticals for their Medicaid populations. At a time when state government officials are struggling to close their budget shortfalls, improving access to FDA approved generic medicines will help lower their healthcare costs while maintaining access to care.”