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CHA Issues Summary of Final Rule on Medicaid Drug Rebate Program, Value-Based Purchasing Arrangements

For CFOs, finance & reimbursement & pharmacy staff

CHA has issued a detailed summary, prepared by Health Policy Alternatives, Inc., of the final rule issued by the Centers for Medicare & Medicaid Services that makes changes to the Medicaid Drug Rebate Program, drug utilization review, and third-party liability regulations, and revises requirements for value-based purchasing (VBP) agreements between states and manufacturers for drugs covered by Medicaid. 

Specifically, the summary details the following changes: 

  • Amending Medicaid’s best price definition to promote VBP arrangements 

  • Implementing statutory provisions to prohibit manufacturers from including authorized generics in average manufacturer prices  

  • Amending drug rebate definitions of line extension drugs subject to an alternative rebate formula 

  • Establishing mandatory minimum standards for drug utilization review to reduce opioid fraud, misuse, and abuse 

Most policies in the final rule are effective March 1, 2021. Policies encouraging VBP, the change of certain definitions, and establishing new data reporting requirements are effective Jan. 1, 2022. Changes clarifying when manufacturer-offered patient assistance programs may be included in best price are effective Jan. 1, 2023. 

The Department of Health Care Services has yet to indicate whether any of the new Medicaid value-based purchasing flexibilities will be adopted in California.