Academic Literature

CMS's Proposed Medicaid Best Price Loophole for Value-Based Purchasing of Drugs

The administration has proposed a loophole in the Medicaid Best Price rules that would dismiss linking the drug's effectiveness to its price.
Originally published on 07/06/2020 in Health Affairs Blog

US pharmaceutical companies have agreed to sell their products to Medicaid programs at the lowest price available in the market. In return, Medicaid programs cover and pay for every product the companies sell.

The administration has proposed a gaping loophole in the Medicaid "Best Price" rules: prices resulting from "value-based purchasing" agreements would not be available broadly to Medicaid programs. However, basing prices on evidence of effectiveness would better align Medicaid program spending with the program's goals of improving health affordably. Dr. Peter Bach describes why this loophole is the reason large purchasers and integrated delivery networks will support the administration's proposal, and how the administration can improve the proposal. 

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