Supporting Value-Based Purchasing Through Changes in Medicaid Best Price

As the United States attempts to shift its health care system from volume to value, payers and biopharmaceutical manufacturers have devised innovative value-based purchasing arrangements. But these arrangements often are challenged to reach their full potential due to legislative and regulatory barriers.

One of those barriers is Medicaid Best Price (MBP), set up over 30 years ago by Congress to ensure that Medicaid paid the lowest price available to any payer. MBP is set quarterly based on the single lowest price available from the manufacturer to any entity, such as payers and providers, and can impact how value-based purchasing arrangements are structured. A manufacturer must provide Medicaid either the maximum rebate in the market or a 23.1 percent rebate, whichever is higher.

In a recent column for PharmaBoardroom, Michael Ciarametaro, vice president for research at the National Pharmaceutical Council, elaborated on the ways in which MBP presents a barrier to creative payment methodologies in the United States. 

Payment innovations provide a way for payers and manufacturers to share financial risk and ensure that patients have access to drugs for chronic conditions such as diabetes, acute treatments such as Hepatitis C, as well as gene therapies.

Mr. Ciarametaro said that a recent survey conducted by NPC and the Duke-Margolis Center for health Policy that asked payers and manufacturers about their efforts around value-based purchasing agreements found that MBP is a barrier to moving these agreements forward.  

Simultaneously with a Centers for Medicare & Medicaid Services review of possible changes to MBP guidelines, NPC is working with such partners as MIT and others to devise new pricing mechanisms that will drive greater payer-manufacturer collaboration while serving the goal of value over volume.

Read the full article on the PharmaBoardroom website.