CMS Proposed Rule to Delay Effective Date of Amended Regulatory Definitions under the Medicaid Drug Rebate Program – Lexology

On Friday, May 28, 2021 the Centers for Medicare & Medicaid Services (“CMS”) published a Proposed Rule that would delay the effective dates of certain amended regulatory definitions under the Medicaid Drug Rebate Program (“MDRP”) from a Final Rule published on December 31, 2020 and an interim final rule with comment period (“IFC”) published on November 25, 2019.

Background

Under the MDRP, in exchange for Medicaid’s coverage of a manufacturer’s drugs, a manufacturer must pay rebates that ensure state Medicaid programs receive the “best price” for drugs. 42 U.S.C. § 1396r-8. The “best price” is the lowest price offered by the manufacturer for a drug to most purchasers, including “any wholesaler, retailer, provider, health maintenance organization, nonprofit entity, or governmental entity,” (with certain exceptions). See 42 U.S.C. §1396r-8(c)(1)(C); 42 C.F.R. §447.505. The MDRP imposes drug price reporting obligations on manufacturers pursuant to the “best price” requirement.

On December 31, 2020, CMS issued a Final Rule which modified the MDRP regulations to offer flexibility for states to enter into innovative value-based purchasing (“VBP”) arrangements with drug manufacturers for new and innovative therapies in order to align pricing and/or payments with clinical or therapeutic outcomes. The Final Rule allows drug manufacturers to report a range of prices offered through VBP arrangements under the “best price” reporting requirement. Specifically, the Final Rule expands the definition of “best price” to state that a lowest price available from a manufacturer may include varying price
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