The latest notice of proposed rulemaking aims to drive down prescription drug cost in Medicaid and builds on President Biden’s executive order to lower prescription drug costs for Americans. The proposal is scheduled to be published in the Federal Register on May 26.
If finalized, the proposed rule will save both states and the federal government money, said Xavier Becerra, secretary of the U.S. Department of Health and Human Services (HHS), in an announcement.
Here are three of the proposed provisions:
Increase transparency of prescription drug costs
The rule would allow the Centers for Medicare & Medicaid Services (CMS) to have more insight into what the most expensive drugs on the market today actually cost to manufacture and distribute. CMS and states would receive additional tools, like a drug price verification survey, which would provide greater transparency into manufacturers’ drug prices. The survey would verify drug prices to increase transparency about why certain drug prices are expensive for Medicaid and help states better negotiate what the Medicaid program pays for high-cost drugs. The information would help state Medicaid agencies operate their pharmacy programs more effectively while helping more people get vital drug treatments.
Increase transparency of managed care plans
Managed care plans cover more than 75 percent of Medicaid beneficiaries but there has been a lack of transparency into the amount plans have paid to pharmacy benefit managers (PBMs) for administering the drug benefit and the amount pharmacies have been paid for the drugs. The lack of transparency, CMS said, has raised concerns that PBMs are charging plans more for a drug than the amount PBMs pay a pharmacy.
To rectify these concerns, CMS proposes that contracts between states, Medicaid-managed care plans, and third-party contractors, such as PBMs, reflect transparent reporting of drug payment information among third-party contractors. It will also ensure that taxpayer dollars are paying for drugs and not increased profits, the agency said.
Increase transparency in drug classifications
The proposed rule also focuses on the potential misclassification of drugs as brand name or generic. If finalized as proposed, the rule would ensure states receive the appropriate rebates to which they are entitled, since states receive a higher percentage of rebate dollars for brand-name drugs compared to generics. With increased transparency, states would be able to determine if manufacturers appropriately classified their covered outpatient drugs, and if they did not, give CMS the ability to take action to correct the misclassification.