Press release

CMS Approves Washington State Plan Amendment Proposal to Allow Supplemental Rebates involving a “Subscription” Model for Prescription Drug Payment in Medicaid

CMS Approves Washington State Plan Amendment Proposal to Allow Supplemental Rebates involving a “Subscription” Model for Prescription Drug Payment in Medicaid

Today, the Centers for Medicare & Medicaid Services (CMS) approved the fourth Medicaid state plan amendment proposal to negotiate supplemental rebate agreements involving value-based purchasing arrangements with drug manufacturers that allows states to link payment for prescription drugs to the value delivered.

This approval is for the state of Washington and follows similar approvals for proposals from Oklahoma, Michigan, and Colorado.  Washington’s proposal is specifically designed to allow the state to negotiate under a “subscription” model with manufacturers of prescription drugs that treat patients with the Hepatitis C Virus.

“High and rising prescription drug prices create major challenges, including for Medicaid agencies,” said CMS Administrator Seema Verma.  “Under President Trump’s leadership, CMS is strengthening the ability of states to negotiate with pharmaceutical companies to lower drug prices.  Washington State’s innovative proposal will demand value from pharmaceutical companies and take steps to eradicate the Hepatitis C virus in their state.  CMS is committed to increasing states’ flexibility to develop policies that lower costs, increase the predictability of expenses, and improve access for patients.”

Under Washington’s proposed subscription model, the state would pay a fixed annual amount to a pharmaceutical manufacturer to purchase an unrestricted supply of Hepatitis C drugs.  Today’s approval of a state plan amendment to pursue supplemental rebate agreements involving value-based purchasing is the first that CMS has approved that is primarily focused on Hepatitis C drugs.

CMS-authorized supplemental rebates that pharmaceutical companies pay to states are exempt from the Medicaid “Best Price” rule.  This rule requires prescription drug manufacturers to offer the lowest price for a drug they negotiate with any other purchaser (subject to certain exceptions) to all states in the Medicaid program.

The value-based supplemental rebate agreement template includes an approved framework for states to negotiate and enter into manufacturer-specific agreements and includes such parameters as the utilization period, outcome-based benchmarks, intervention population for which benchmarks will be measured, and evaluation methodology.  CMS welcomes proposals from other states for state plan amendments to allow negotiation of supplemental rebates involving value based purchasing in Medicaid, and the agency has heard additional interest in a “subscription” model for Hepatitis C drugs.

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