Health Law Daily CMS proposes rules more drug purchasing flexibility between manufacturers and Medicaid, others
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Friday, June 19, 2020

CMS proposes rules more drug purchasing flexibility between manufacturers and Medicaid, others

By Leah S. Poniatowski, J.D.

Value-based purchasing arrangements and drug utilization review standards are among the proposals available for comment.

Motivated to promote "transparency, flexibility, and innovation" in drug pricing between manufacturers and payors, particularly states, CMS proposed several rules to support value-based purchasing arrangements, including authorized generic sales, pharmacy benefit managers accumulator programs, Medicaid drug utilization review, third party liability, among others. Comments on these proposals should be sent no later than July 20, 2020 (Notice, 85 FR 37286, June 19, 2020).

Value-based purchasing. The over-arching goal of the proposed rules is to refine the existing regulatory framework in order to support state flexibility in engaging in innovative value-based purchasing arrangements of prescription medications with drug manufacturers. CMS believes these new rules will modernize the agency’s approach to how manufacturers interpret the "best price" law, noting that more than one price may be available for a drug based on patient outcomes. Also, in order to ensure compliance with the numerous applicable laws and regulations and to reduce the administrative burden, CMS proposed updating and adding several regulatory provisions.

MDRP. Among these additional provisions, CMS proposed updating the state and manufacturer reporting requirements to the Medicaid Drug Rebate Program (MDRP). CMS also included definitions in the proposed rule for "CMS-authorized supplemental rebate agreement," "line extension," and other drug types with respect to the MDRP.

Additional rule changes. CMS has also proposed changes to rules concerning average manufacturing price (AMP), addressing authorized generic sales when manufacturers calculate AMP; programs for pharmacy benefit manager accumulators, their impact on AMP, and best price. CMS also offered new provisions concerning Medicaid drug utilization review in order to mitigate fraud and misuse of opioids. Additionally, CMS proposed changes to the rules governing coordination of benefits and third-party liability.

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