CMS Proposes Rule to Support Value-Based Purchasing for Drugs
The Centers for Medicare & Medicaid Services (CMS) has proposed a new rule with provisions designed to advance value-based purchasing (VBP) arrangements with drug manufacturers. Comments about the proposal are due July 20, 2020.
The proposed rule would change certain provisions in the Medicaid Drug Rebate Program that currently require manufacturers to offer “best price” (the lowest price available to any wholesaler, retailer, or provider) to state Medicaid programs. The changes proposed by CMS address manufacturer concerns that VBP arrangements might result in a costly drug being made available at a very low cost or even at no cost in some cases in the commercial sector, which would trigger the “best price” requirement.
The rule would create flexibility to avoid that outcome and encourage manufacturer participation by allowing them to report best price under VBP arrangements as a “bundled sale” or to report multiple best prices calculations, including a range of discounts available under VBP arrangements and a separate best price for non-VBP arrangements. Some Medicaid experts have raised concerns, however, that the proposed CMS change is not necessary because many manufacturers already participate in VBP arrangements, and that the change could subject “best price” to gaming by manufacturers that could end up of costing state Medicaid programs more.
Five states (OK, MI, CO, MA, and AL) now have state plan amendments that enable VBP arrangements with drug manufacturers through supplemental Medicaid drug rebates that are already exempt from best price calculations. (Additionally, Louisiana and Washington’s state plan amendments enabling subscription-based payment models for hepatitis C drugs.) To date, evidence that this approach generates savings has been limited, however states do value these payment arrangements as they allow states to capture rebates if the drugs don’t work as promised – a growing concern as more and more drugs enter the market through fast-track and accelerated approval processes.
Oklahoma, a leading state in VBP initiatives whose early work was supported in part by a grant from the National Academy for State Health Policy, has implemented a number of VBP contracts with manufacturers that link payment to a drug’s performance on outcomes such as reductions in hospitalizations or adherence rates. More recently, both Oklahoma and Massachusetts have secured VBP arrangements for Zolgensma, a new, costly gene therapy for treating spinal muscular atrophy in infants. The Massachusetts VBP agreement includes an upfront discount off the $2.1 million per patient price for Zolgensma, and the manufacturer’s commitment to provide rebates to the state if the drug does not perform against agreed upon outcome measures.
Read the proposed rule, Medicaid Program: Establishing Minimum Standards in Medicaid State Drug Utilization Review and Supporting Value-Based Purchasing for Drugs Covered in Medicaid, Revising Medicaid Drug Rebate and Third Party Liability Requirements, and submit a comment by 5 p.m. (ET) Monday, July 20, 2020.
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