CMS Addresses Impact of Value Based Purchasing Arrangements on Medicaid Drug Rebate Program

On July 14, 2016, the Centers for Medicare and Medicaid Services (CMS or the Agency) issued a Medicaid Drug Rebate Program Notice to Participating Drug Manufacturers, Release Number 99, which addresses the impact of value based purchasing (VBP) arrangements on Medicaid.

CMS left most questions unanswered. CMS stated that a VBP arrangement’s impact on best price depends on the arrangement’s structure and recommended that manufacturers consider the statute and implementing regulations on best price when negotiating such arrangements. CMS reminded manufacturers to document any reasonable assumptions made in the calculation of best price. Additionally, CMS asked manufacturers to submit specific questions, so that CMS can address common questions from manufacturers in subsequent guidance. CMS also suggests the Agency may be willing to address questions concerning specific manufacturer arrangements.

Despite the lack of clear guidance on key best price questions, CMS stated its support for VBP arrangements generally. It encouraged manufacturers to enter into such arrangements with state Medicaid programs and to negotiate arrangements that include supplemental rebates, which are excluded from best price. Additionally, CMS urged states to study the use of supplemental rebates and consider collecting supplemental rebates for Medicaid managed care claims as a mechanism for improving patient outcomes and reducing overall Medicaid costs.

 

For more on other breaking drug pricing related news, visit Sidley’s Global Drug Pricing page.

 

If you have questions regarding this Sidley Update, please contact the Sidley lawyer with whom you usually work, or

William A. Sarraillle Partner wsarraille@sidley.com +1 202 736 8195

Meenakshi Datta Partner mdatta@sidley.com +1 312 853 7169

Trevor L. Wear Partner twear@sidley.com +1 312 8537101

Stephanie P. Hales Partner shales@sidley.com +1 202 736 8349

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Sidley Global Life Sciences Practice

Sidley Healthcare Practice

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