Massachusetts Proposes New Twist On Negotiating Medicaid Drug Costs

US News & World Report recently reported “Massachusetts Grabs Spotlight By Proposing New Twist On Medicaid Drug Coverage Other states are watching closely, officials say.” Following is an excerpt:

“In the absence of new federal policies to tame break-the-bank drug prices, Massachusetts’ state Medicaid program hopes to road-test an idea both radical and market-driven. It wants the power to negotiate discounts for the drugs it purchases and to exclude drugs with limited treatment value.

‘This is a serious demonstration proposal,’ said Sara Rosenbaum, a health policy expert and professor at George Washington University. ‘They’re not simply using [this idea] as an excuse to cut Medicaid. They’re trying to take a step toward efficiency.’

If the Department of Health and Human Services approves the Bay State’s plan, others will likely take similar action. According to the most recent federal data, Medicaid spending on prescription drugs increased about 25 percent in 2014 and nearly 14 percent in 2015.

Currently, state Medicaid programs are required to cover almost all drugs that have received Food and Drug Administration approval, including multiple drugs from different manufacturers used for the same purpose and in the same category. In exchange, manufacturers must discount those drugs — typically based on a set percentage of the list price, specified by federal law. The idea is Medicaid’s vulnerable beneficiaries get medications they need and the state doesn’t go broke paying for them.

As drug prices soar, states say, those fractional rebates no longer suffice to defray the burden of rising costs.”

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