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Penalizing Generic Drugs with the CPI Rebate Will Reduce Competition and Likely Increase Drug Shortages
As part of the Bipartisan Budget Agreement of 2015, Congress extended the Consumer Price Index (CPI) rebate provisions to multisource generic drugs, aiming to control drug prices paid by the Medicaid program. Partner Richard Manning and Fred Selck provide evidence that these regulations may have precisely the opposite of their intended effect. The imposition of CPI penalties is likely to reduce the number of companies selling generics, which will increase the likelihood of shortages and may ultimately lead to higher generic drug prices over time.