CMS Will Not Finalize Best Price “Stacking” Provision in Medicaid Drug Rebate Proposal

The Centers for Medicare & Medicaid Services (CMS) announced on May 15, 2024 that it will not finalize, at this time, the proposed stacking provision set forth in the agency’s May 2023 Medicaid Drug Rebate Program proposed rule (Proposed Rule).

The Proposed Rule would implement a variety of drug pricing reforms under the Medicaid Drug Rebate Program, such as authorizing the Department of Health and Human Services to identify certain “high-cost drugs” that would be subject to potential CMS information requests for pricing, production cost, and utilization data; adopting an expanded definition of the term “manufacturer”; and addressing certain “misclassification” considerations for purposes of rebate calculations. One of the troubling provisions in that Proposed Rule from a legal perspective was for drug manufacturers to “stack” cumulative price concessions provided to different entities to determine a final best price realized by the manufacturer.

The proposed stacking provision would have amended existing best price regulations to require manufacturers to “stack” cumulative discounts, rebates, or other arrangements “provided to different [best price] eligible entities” for purposes of determining a final best price realized by the manufacturer, instead of identifying the best price available from the manufacturer. If finalized, the proposal would have signaled a stark reversal of CMS’ prior guidance on the methodology for calculating best price and would likely be subject to legal challenge.

CMS’ May 15, 2024 press release states that the agency will not finalize the best price stacking proposal. Instead, the agency plans to collect additional information from manufacturers regarding best price stacking methodologies “to better understand and inform future rulemaking.”

The press release states that CMS is finalizing the other components of the Proposed Rule. The final rule was sent to the Office of Management and Budget on March 22, 2024, and is expected to be released next month according to the Unified Agenda.

Manufacturers should continue to closely monitor for the release of the final rule and any supplemental requests for comments related to best price stacking methodologies.