A Legislative History of the Medicaid Drug Rebate Law: The Drug Industry and the Crusade of Senator David Pryor

Abstract

The Medicaid Prescription Drug Rebate Program was enacted in 1990, granting the Medicaid program “most-favored customer†status and requiring drug manufacturers sell their drugs to Medicaid at the “best price†available to any other purchaser. Although drug rebates remain an integral part of Medicaid today, the program’s legislative history is largely unexamined. This paper reveals the political story behind the law, focusing on the dynamic between Senator David Pryor (D-Ark.) and the Pharmaceutical Manufacturers Association, the trade group representing name-brand drug products.