The U.S. Centers for Medicare & Medicaid Services (CMS) has proposed to delay implementing a portion of a regulation encouraging value-based purchasing for drugs in the Medicaid program that may lead to drugs having multiple best prices.
Finalized during the final days of the Trump administration, the regulation drew criticism from 340B drug discount program proponents. They said not enough attention was paid to how 340B could be affected by the regulation’s changes to the Medicaid drug rebate program (MDRP).
The new CMS proposal would delay implementing the section pertaining to best prices until July 1, 2022. That’s six months later than slated under the final regulation, which was published in the Federal Register late last December.
The overall rule was intended to encourage drug manufacturers to enter into value-based agreements with health plans. CMS estimated the rule would save the federal and state governments as much as $228 million during its first four years of implementation. Much of the rule was implemented on March 1.
The regulation considered for delay would let drug manufacturers report the lowest price negotiated with a payer as the best price, but it also “may include varying best price points for a single dosage form and strength as a result of a value-based purchasing arrangement.”
CMS published the proposed delay regarding best prices late last week. Comments on the delay are currently being solicited until late June. Five comments have been submitted so far, none from any lobbying organizations. Such groups tend to submit remarks toward the end of the public comment period.
The original proposed rule received enormous attention, drawing more than 30,000 comments last year—a number about 10 times larger than what is typically received for a significant policy change from CMS or the U.S. Health and Human Services Department (HHS).
The hospital group 340B Health originally expressed concern about the rule and how it might impact MDRP. “It is critical that as CMS considers changes to MDRP rules, CMS evaluate the impact (of the rule) on the 340B program,” it wrote in a five-page letter submitted last July 20.
The hospital group noted that CMS had not conducted an analysis on how future value-based purchasing arrangements would impact 340B.
According to 340B Health, the rule’s preamble “appears to suggest that a new best price under a (value-based payment) would be used to calculate a Medicaid rebate only if a manufacturer entered into a VBP with Medicaid and only for drugs dispensed to a Medicaid patient having the outcome triggering the best price. If this were the case, it is possible that a manufacturer could set a new best price under a VBP arrangement, but the new best price would not be used to determine the amount of the Medicaid rebate or 340B price. Instead, ‘the best price used in the Medicaid rebate formula would mirror the lowest price available absent a VBP arrangement.’”
As a result, 340B Health asked CMS to “clarify the use of multiple best prices for the calculation of Medicaid rebates and the 340B ceiling price. CMS should also “consider the impact of multiple best prices on safety-net programs and ensure that actions intended to encourage the use of VBPs do not increase costs for 340B providers.”
Additionally, 340B Health raised concerns that value-based payments could also allow bundled sales of drugs if they are conditioned by a performance requirement such as an evidence-based outcome. “We are concerned that the broad nature of this proposal, if finalized, could allow manufacturers to include discounts in bundled sales in creative ways that would avoid setting a new best price and would reduce their Medicaid rebate obligations, which could affect 340B prices.”
Similar concerns were aired by drug manufacturers. UCB, Inc. noted in its comments on the proposed rule that “given the share of the drug market represented by the 340B program, any misunderstanding around its operation would have far reaching effects within the U.S. healthcare system. It is imperative that any confusion around the calculation of ceiling price is clarified before the best price proposals are operationalized.”
Genentech also asserted that “CMS should not finalize any changes to the MDRP best price calculations without proposing with notice and public comment, corresponding changes to the calculation of 340B ceiling price.” Based on the comments it receives, CMS will make a decision about whether to delay the new regulation on best prices within the next few months, or potentially even float a proposal to revise it.