Oklahoma Medicaid Plan For Value-Based Contracts Cleared By CMS
Executive Summary
Agency approves "first ever" supplemental rebate plan to enable value-based contracting a US state Medicaid program.
The Centers for Medicare and Medicaid Services approved a proposal from Oklahoma Medicaid that will allow the state to negotiate supplemental rebate agreements in the context of value-based contracts with drug manufacturers that could produce extra rebates for the state if specified clinical outcomes are not achieved.
The proposal amends Oklahoma’s Medicaid plan and allows the state to enter into tailored agreements with manufacturers on a voluntary basis.
CMS announced the Oklahoma approval the same day it announced it denied a request by Massachusetts to use a closed formulary in its Medicaid program to lower drug costs. (Also see "No Closed Formularies In Medicaid Without Forgoing Rebates, CMS Tells Massachusetts" - Pink Sheet, 27 Jun, 2018.)
“Oklahoma’s plan for value-based drug contracts is an important example of how states can innovate to bring down drug costs,” HHS Secretary Alex Azar said in a June 27 release.
“The Trump Administration is committed to giving states the flexibility they need to make healthcare more affordable, and strongly supports innovations like value-based purchasing for prescription drugs.”
Nearly every state Medicaid plan already has the authority to negotiate supplemental rebate agreements (SRAs) but CMS still reviews all state plan amendments, including SRAs. States currently negotiate supplemental rebates in return for preferred placement on state drug lists.
SRAs are exempt from the Medicaid “best price” rule that requires drug firms to extend the lowest price for a drug they negotiate with any other buyer to all state Medicaid programs. That means manufacturers would not have to worry that rebates provided to Oklahoma under a value-based contract would trigger a new best price that must be offered nationwide.