Drug manufacturers researching an already-approved medicine for a new use could apply for a federal designation that exempts them from a Medicaid and Medicare rebate penalty normally applied to so-called line extensions — situations where a company charges more for a drug by adding a new approved indication. To qualify, the drug must have been approved at least 10 years ago, must be under active clinical investigation for a new indication with no currently approved alternative, and the targeted disease must be one where at least one-third of claims come from Medicaid, Medicare low-income beneficiaries, the 340B discount program, or the VA. The Secretary of Health and Human Services would have 90 days to establish the designation process and 60 days to respond to each manufacturer request.
Corporate Benefits
- Manufacturer rebate exemption for designated priority research drugs — removes the line-extension rebate penalty from Medicaid and Medicare for qualifying older drugs under new-indication research
Average Household Impact
- Medicaid and Medicare rebate collections — government programs receive lower mandatory rebates on priority research drugs, potentially shifting costs to program budgets
Congressional Summary
Old Drugs, New Cures ActThis bill exempts manufacturers of certain long-standing drugs from paying specialized rebates under the Medicaid Drug Rebate Program and the Medicare Prescription Drug Inflation Rebate Program. (Under these programs, drug manufacturers pay rebates to state Medicaid programs for certain drugs covered under Medicaid and to the Centers for Medicare & Medicaid Services for certain drugs covered under Medicare.)Specifically, manufacturers may request that a drug that would otherwise be considered a line extension under the Medicaid and Medicare rebate programs to instead be designated as a priority research drug. (A line extension refers to an oral dose of a new formulation of an existing drug, such as an extended release formulation, that would subject the drug to specialized rebates under the Medicaid and Medicare drug rebate programs.)Under the bill, a drug qualifies as a priority research drug if (1) at least 10 years have elapsed since the drug was first approved, (2) the manufacturer is investigating a new use of the drug that would address a significant unmet need, and (3) the new use addresses a disease or condition that has a high prevalence among beneficiaries of Medicaid, Medicare, or other federal health care programs.
Details
- Congress
- 119th
- Chamber
- House
- Status
- summarized
- Action
- Introduced in House
- Action Date
- 2025-04-01
- Date Added
- 2026-05-05
- Source
- Congress.gov →
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