New legislation to approve ‘subscription’ model for prescription drug payments in Washington state
The Centers for Medicare & Medicaid Services (CMS; MA, USA), a United States Department of Health and Human Services federal agency, has approved legislation in Washington to support a new Medicaid prescription drug payment model.
The Centers for Medicare & Medicaid Services (CMS; MA, USA) has approved its fourth Medicaid modernization amendment. This latest change aims to allow for supplemental rebate negotiations in Washington state to be rooted in value-based purchasing arrangements with drug companies, tying prescription drug costs to the value the drugs deliver.
This amendment follows approvals for Oklahoma, Michigan and Colorado states to adopt similar plans.
The Washington state law change, however, is the first CMS-approved amendment that aims to allow Washington to negotiate with drug manufacturing companies under a ‘subscription’ model specifically for hepatitis C prescription drugs.
Washington’s initiative aims to both demand value from drug manufacturing companies, whilst eradicating hepatitis C virus from the state.
The subscription model proposes Washington state paying a specified, annual cost to a specific drug manufacturing company in return for unlimited supply of a specified drug, in this instance, anti-hepatitis C virus drugs.
The Medicaid ‘best price’ rule requires prescription drug manufacturing companies to offer the lowest price they can negotiate with any other purchaser – with certain exceptions – to all Medicaid program states. The CMS-authorized supplemental rebates payed to states by pharmaceutical companies are, at the moment, exempt from this rule.
The value-based supplemental rebate agreement plan passed in this amendment may therefore allow states to negotiate, and enter in to, agreements with specific drug manufacturers with parameters such as outcome-based benchmarks.
Seema Verma, CMS administrator, commented: “High and rising prescription drug prices create major challenges, including for Medicaid agencies…Under President Trump’s leadership, CMS is strengthening the ability of states to negotiate with pharmaceutical companies to lower drug prices.”
The CMS says that it welcomes applications from other states for similar state plan changes that will allow them to negotiate supplemental rebates with value-based purchasing in Medicaid.