Weekly Policy Blog: Opposition to CMS’ Proposed Medicaid Drug Rebate Program (MDRP) Rule

CBSA and other members of the Council of State Bioscience Associations (CSBA) have submitted a letter to the Centers for Medicare & Medicaid Services (CMS) expressing our deep concern with a recent proposed rule that seeks to reinterpret the Medicaid “Best Price” calculation for the Medicaid Drug Rebate Program (MDRP). The proposal would make manufacturers aggregate, or “stack,” all discounts and rebates received throughout their supply chain when determining the “Best Price,” which establishes what state Medicaid programs pay for drugs. An October 27th letter from ten Senate Finance Committee Republicans agrees that this proposal puts patients at risk of losing access to life-saving medicines and vaccines. 

Concerns with the Proposed Rule 

In summary, we are concerned that this proposed rule would place a substantial burden on biotechnology manufacturers and negatively impact patients, healthcare programs such as the 340B program, and the commercial market, leading to increased healthcare expenses and out-of-pocket costs for patients. Specifically, our concerns are: 

  • This sweeping proposal represents a statutory overreach and will result in upending more than thirty years of historical precedent without statutory authority.  
  • CMS has greatly underestimated the negative downstream impacts this proposed rule would have on the drug manufacturing supply chain, critical government healthcare programs such as 340B, and ultimately the patients our members seek to treat.  
  • CMS’ proposal would require manufacturers to aggregate, or “stack,” price concessions provided to separate entities across the supply chain for Medicaid rebate Best Price purposes. This is an abrupt departure from decades of Medicaid policy precedent that has defined “Best Price” as the single Best Price made available by the manufacturer to a particular entity. 
  • The new calculation of Best Price to “stack” cumulative discounts, rebates, or other arrangements across multiple distinct entities is completely unworkable as no system exists to track discounts throughout the supply chain. Manufacturers and other members of the supply chain would not be able to operationalize such a scheme.  
  • The proposed new definition of “Covered Outpatient Drug” (COD) contradicts Congressional intent and the requirements outlined in the Social Security Act. This would shift the reimbursement structure of drugs, particularly those administered in inpatient settings. Such an approach is counter to CMS’ efforts to encourage innovative payment approaches such as value-based purchasing arrangements (VBPs) and will put patient access to new, innovative therapies at risk.  
  • The rule imposes new reporting obligations on manufacturers through a new drug price verification survey. This new verification survey – which we believe is a blatant overreach of CMS’ authority – would require the reporting of pricing input data that includes a significant amount of confidential and proprietary information. Such requirements would bring an additional burden on manufacturers and result in unintended barriers for patients seeking access to lifesaving therapies.  
  • The proposed rule also prescribes a new definition of vaccine that is contrary to how vaccines are defined across other federal programs with vaccine decision-making authority, thereby creating barriers to patient access to life-saving products due to programmatic overlap and confusion. The definition does not consider products that are used in a vaccine-like manner and are intended for broad public health utilization for prevention of infectious diseases. Failure to align definitions of vaccines and vaccine-like products across agencies will cause interoperability issues and limit patient access to these products among Medicaid beneficiaries, as well as children who are un- or underinsured.  

CSBA members urge CMS to reconsider the proposed rule and act to preserve the original definitions and intent of the Medicaid program, which is to ensure that Medicaid is given the Best Price on par with a manufacturer’s sale of a prescription drug to a single customer.  

Letter of Opposition from Senate Finance Committee Members 

On October 27th, Senate Finance Committee Ranking Member Mike Crapo (R-ID) and ten other Republican members of the Senate Finance Committee sent a letter to CMS Administrator Chiquita Brooks-LaSure echoing many of our concerns. The November 1st press release highlights that the Senators urge CMS “to abandon proposals that risk patient access to cutting-edge prescription drugs.” The Senators’ letter emphasizes that the rule change is unworkable, faces “legal headwinds,” risks disrupting patient care, and would not achieve desired savings on drug coverage. 

BIO’s Take

“Under the guise of ‘technical changes,’ CMS has proposed substantial and legally suspect changes to the Medicaid drug rebate program. These changes jeopardize the grand bargain that has been in place for 30 years, where drug manufacturers pay mandatory rebates to Medicaid to ensure coverage of FDA-approved therapies for vulnerable patients. CMS should withdraw this rule,” says BIO Chief Policy Officer John Murphy. 

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