A Medicaid advisory panel wants Congress to remove a cap on rebates paid for drugs under the program and create a grace period for states to restrict coverage of a drug for 180 days to determine whether it is effective.
The Medicaid and CHIP Payment Advisory Commission adopted both policies unanimously during its Thursday meeting in Washington.
Currently, Medicaid generally must cover a drug as soon as it is launched onto the market, but this requirement doesn't give states enough time to assess the new drug or apply prior authorization policies.
The recommendation to allow a 180-day grace period would be similar to the grace period that other payers, such as Medicare Part D plans, have to make a coverage decision.
Commission members were also keen to scrap a cap on drug rebates. A Medicaid drug rebate is capped at 100% of a drug's average manufacturer price.
However, once a drug hits the cap then a manufacturer could raise the price without increasing the net rebate obligation to Medicaid, according to a commission report.
Commission members had initially agreed to move the cap up to 125% of a drug's average manufacturer price. However, they decided to remove the cap entirely during a discussion on Thursday.
"My personal preference would be to just eliminate the cap and generate all the savings," said commission member Dr. Chris Gorton, former president of public plans at Tufts Health Plan.