New Biden pro­pos­al would ex­pose the ac­tu­al cost of drugs cov­ered by Med­ic­aid

Build­ing off its new ne­go­ti­at­ing pow­ers thanks to the In­fla­tion Re­duc­tion Act, the Biden ad­min­is­tra­tion and Cen­ters for Medicare and Med­ic­aid Ser­vices (CMS) late yes­ter­day pro­posed a new rule that could help states bet­ter un­der­stand what the most ex­pen­sive drugs on the mar­ket to­day ac­tu­al­ly cost to man­u­fac­ture and dis­trib­ute.

The pro­pos­al would give CMS and states new tools, like a drug price ver­i­fi­ca­tion sur­vey, which could help ver­i­fy drug prices and in­crease trans­paren­cy about why cer­tain drug prices are ex­pen­sive for Med­ic­aid, and help states bet­ter ne­go­ti­ate what they pay for high-cost drugs.

“For ex­am­ple, trans­paren­cy in­to a man­u­fac­tur­er’s costs and process for es­tab­lish­ing a drug price via the sur­vey, along with oth­er fac­tors, would give States the abil­i­ty to bet­ter ne­go­ti­ate sup­ple­men­tal re­bates, and bet­ter un­der­stand the im­pact of the drug on its bud­get as sup­ple­men­tal re­bates are ne­go­ti­at­ed,” the 187-page pro­pos­al says.

Xavier Be­cer­ra

The sur­vey would come as CMS ac­knowl­edges the fact that there cur­rent­ly isn’t a cen­tral­ized col­lec­tion of spe­cif­ic da­ta from man­u­fac­tur­ers (or whole­salers) used by CMS to ver­i­fy prices that man­u­fac­tur­ers re­port. But CMS al­so made clear it won’t be us­ing the sur­vey da­ta to fur­ther as­sess ei­ther the clin­i­cal or cost ef­fec­tive­ness of the drugs re­viewed.

“With to­day’s pro­posed rule, we are ad­vanc­ing un­prece­dent­ed ef­forts to in­crease trans­paren­cy in pre­scrip­tion drug costs, be­ing good stew­ards of the Med­ic­aid pro­gram, and pro­tect­ing its fi­nan­cial in­tegri­ty,” HHS Sec­re­tary Xavier Be­cer­ra said in a state­ment. “This pro­posed rule will save both states and the fed­er­al gov­ern­ment mon­ey.”

In ad­di­tion to this new trans­paren­cy ef­fort, the Biden ad­min­is­tra­tion was al­so re­port­ed­ly push­ing for an ex­pan­sion of its new­ly cre­at­ed pow­ers to al­low CMS to ne­go­ti­ate on some of the most ex­pen­sive drugs for the first time, and al­so for the first time ever, re­quires drug com­pa­nies to pay re­bates to Medicare when their pre­scrip­tion drug prices in­crease faster than the rate of in­fla­tion.