CMS has finalized a rule which promotes private payers and states negotiating value-based purchasing contracts for Medicaid drugs, along with other changes. The final rule was built upon the Medicaid Drug Rebate Program (MDRP) law from the 1990s, also called the Medicaid “best price” rule.
- The rule established that Medicaid beneficiaries should receive a rebate from pharmaceutical manufacturers. In establishing this law, Congress aimed to secure the lowest price on prescription drugs for Medicaid beneficiaries.
- Midway through 2020, CMS suggested that MDRP was due for more extensive updates to provide more flexibility for payers looking to cover Medicaid prescriptions under value-based purchasing models.
- The rule also refined requirements for cost-sharing assistance. If cost-sharing assistance measures do not diminish costs for patients but instead lower prices for payers, then pharmaceutical manufacturers will have to count them as Medicaid rebates.
- The American Association of Retired Persons (AARP) was concerned about the new CMS definition for value-based purchasing agreements. They predicted that pharmaceutical companies would leverage this ambiguity to boost revenue and diminish Medicaid rebates.
- CMS promised to support operational and implementation challenges by providing a Medicaid Drug Program system to replace the Drug Data Reporting and Medicaid Data Reporting systems. It will be available in July 2021.