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New rules on Medicaid discounts a bummer for states

Wall Street Journal Health Blog, April 22, 2010

The changes to Medicaid rebates that are paring some drug companies' sales and earnings may also cut into already-ailing state budgets. The healthcare overhaul increases the minimum brand name drug discount to 23.1% from 15.1%, but also changes how the funds are split between the states and the feds, shifting a "significant portion" to the latter. A spokeswoman for Sen. Majority Leader Harry Reid says the states are benefiting from the $434 billion, 10-year increase in Medicaid spending that the redistributed rebates will help fund. But a Kaiser Health News analysis finds that only Arizona, Massachusetts, and New Mexico would come out ahead with the new rebate policy.