A quick reminder on why we care about the best price
As our regular readers know, we speak a lot about the best Medicaid price on this blog, especially because of the intersection of this central pricing rule and new and emerging value-based agreements. My colleague Haider took a deep dive into the best price rules earlier this year against the backdrop of a Trump administration settlement that would allow manufacturers to set multiple best prices to encourage value-based deals. In 2016 (man, we’re getting older!) I did a great intro that explained to our readers why the best Medicaid price and innovative payment terms are often at odds. But I still think it’s worth reminding our readers why we’re even having this conversation.
For your information, as part of the Medicaid drug reimbursement program,
The best price policy dates back to the beginnings of the Medicaid Prescription Drug Rebate Program (adopted as part of the Omnibus Budget Reconciliation Act of 1990, Pub. L. 101-508), which was originally based on the idea that Medicaid programs should ‘State should be obtained the status of most favored customer. Section 1927 (c) (1) (C) of the Social Security Act defines best price, in part, as meaning:
“Relating to a single-source drug or an innovative multi-source drug from a manufacturer.”
In 42 CFR § 447.505, CMS clarified the meaning of the best price as follows:
“For a single-source drug or an innovative multi-source drug from a manufacturer (including the lowest price available to any entity for an authorized generic drug), the lowest price offered by the manufacturer during the period of discount to any wholesaler, retailer, supplier, maintenance organization, non-profit entity or government entity in
Of course – price reporting is complicated – and there are many exceptions and exclusions to the definitions above. But for the sake of our discussion today, it suffices to know that the best price is usually the “best price” offered by a maker to a defined set of buyers, with a few exceptions. While this rule has very noble political goals at its root, it has also had the unintended impact of preventing some new value-based arrangements. Why? Because in a traditional value-based agreement (such as an outcome-based agreement), in which a manufacturer agrees to reimburse a payer if therapy fails, that reimbursement could redefine a manufacturer’s best price. For example, if a manufacturer offers a
How does the Pfizer warranty program avoid the best price?
In many respects, from the perspective of the payor or the individual, the
Now is the time that I need you to scroll to the top and look at the law and regulations! If you read the fine print of
Remember the wording of the best price definition? “The lowest price available from the manufacturer. “ When
What does CMS have to say about all of this
There is no safe haven or best price exception guarantee, but
As a reminder, did I mention the Trump administration’s regulations published at the end of 2020 which are now subject to multiple delays? Well, in that regulation, which dealt in part with a new policy that (if eventually implemented) would allow manufacturers to establish various better prices to encourage the use of value-based arrangements, CMS ruled on – and seemed to bless– the guarantee model:
The premium paid by the manufacturer to a third party to guarantee a drug and provide benefits to payers and patients when certain clinical or performance metrics are not met, provides an incentive for payers, providers and patients to purchase the drug. Therefore, the premium paid by a manufacturer reduces the price of the drug and should be included in the “best price”. However, the benefits paid by the third party in the event that the drug does not meet certain clinical or performance measures are exempt from the “best price” because the payments made by the third party to the payer do not represent a price available from the manufacturer. to any qualifying entity at the best price as provided in § 447.505 (a) and does not represent a sale from the manufacturer to an AMP eligible entity in accordance with § 447.504 (b) or (d). Therefore, under this warranty model, a manufacturer would pay both Section 1927 discounts for the drug, as well as a premium for a warranty policy, the value of which would have to be included in the calculation. of its best price, regardless of whether the manufacturer uses a VBP arrangement which results in several better prices.
CMS takeaways: while premium payments from
In the future, we expect other manufacturers to follow suit.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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