The CMS is advising state Medicaid agencies and manufacturers on how they should approach value-based drug purchasing contracts as they grow popular among payers.
The agency released a guidance document on Thursday that encourages payment based on outcomes to offset high drug costs.
Value-based contracts require doctors, insurers, pharmacy benefit managers and drug companies to cooperate and share data.
Thursday's guidance appears to be a response to concerns from manufacturers that thought the arrangements might affect their drug's Medicaid “best price,” which is the the lowest price available from a single source drugmaker or an innovator drug. The CMS says manufacturers were worried that lower price offers and additional service offerings contained in VBP agreements would lower the manufacturers' calculated best price and add to their rebate obligations, making the agreements less attractive to drugmakers.
The CMS concluded that the impact on manufacturers' best prices will differ based on the structure of individual VBP arrangements, so the agency recommends that manufacturers consult federal law and regulations surrounding best price and ask the CMS if they need any further assistance. The agency said manufacturers should have clear records of how they're calculating their best price.
“Based on these inquiries, we will seek to generalize lessons learned regarding common questions and arrangements in subsequent guidance,” the CMS wrote.
Supplemental rebates under a CMS-approved agreement are excluded from a drugmaker's best price calculation, so states and manufacturers are encouraged to negotiate these into their contract, the agency said.
The CMS also addressed supplemental rebates on Medicaid managed care drug claims. Almost all states collect additional rebates on Medicaid fee-for-service drug claims, but only some collect them for managed care claims.
Regardless of whether a VBP agreement is involved, CMS officials “urged” that states consider negotiating supplemental rebates with manufacturers for some or all of their Medicaid managed care drug claims, with consideration for how that impacts their relationships with managed care organizations.
“States should determine if supplemental rebates in the managed care context will result in better patient outcomes and reduced costs to Medicaid overall,” the guidance reads.
Private insurers and drugmakers have been mulling over how to best execute value-based drug contracts.
In November, Harvard Pilgrim Health Care struck a deal with drugmaker Amgen for its new cholesterol-lowering drug, Repatha.
Novartis and insurers Aetna and Cigna Corp. agreed to pay-for-performance deals for Novartis' heart drug Entresto, which costs about $4,500 annually and was approved by the government last July.
Express Scripts Holding Co., the nation's largest pharmacy benefit manager, also started paying for the performance of certain cancer drugs this year.