Value-Based Purchasing Rule For Medicaid Rx Drugs

January 22, 2021

Writing in Health Affairs, outgoing CMS Administrator Seema Verma touts how the Trump Administration helped paved the way for more outcomes-based contracts on prescription drugs by clarifying that these contracts won’t run afoul of the Medicaid “best price” provision — provided that Medicaid programs are also offered the same outcomes-based contracts or at least a “bundled” price that approximates the effective result of those arrangements. As ICER has noted before, these outcomes-based contracts can be quite helpful, particularly for one-time cell and gene therapies for which the long-term durability of effect is not yet fully known.

Administrator Verma repeatedly refers to these types of contracts as “value-based arrangements,” and the single word “value” appears 57 times throughout the article. But at the risk of being overly semantic, I’d argue that this type of contract — where the payer receives a partial refund if the desired clinical outcome isn’t achieved — doesn’t necessarily represent good “value” unless the underlying price is scaled to how well the drug is expected to improve patients’ lives. Read more here.

(Source: Seema Veema; Health Affairs; 1/22/21)

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