- The Biden administration announced a proposal Tuesday that aims to increase transparency of prescription drug costs under Medicaid. The notice of proposed rulemaking recommends that the CMS and states get a drug price verification survey tool to verify prices and negotiate for expensive drugs under Medicaid.
- The notice also focuses on more transparency into what health plans pay to pharmacy benefit managers and what pharmacies get paid for drugs. The CMS proposes changes to contracts among states, Medicaid managed care plans and third-party contractors to more accurately reflect drug payment information among third-party contractors.
- In addition, the CMS is proposing provisions for states to avoid misclassification of drugs as brand name or generic. It outlines steps it would take if a drug is misclassified, such as suspending the drug or manufacturer from the Medicaid Drug Rebate Program or excluding the drug from Medicaid payments, the agency reported.
The new proposal on drug transparency follows an October 2022 executive order President Joe Biden issued on lowering prescription drug costs, which directed the HHS to look into steps it could take to lower prescription drug costs for working and middle-class families.
It also comes on the heels of multiple House committee hearings where lawmakers on both sides of the aisle accused PBMs of profiting off the backs of patients and taxpayers.
The Biden administration is focused on increasing drug transparency for Medicaid, HHS Secretary Xavier Becerra said.
“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,” Becerra said in a statement. “This proposed rule will save both states and the federal government money.”
The administration created the Medicare Prescription Drug Inflation Rebate Program to require drug companies to pay rebates to Medicare when prescription drug prices rise faster than the prices for drugs under Medicare.
In addition, the administration also recently proposed new rules for Medicaid payment transparency.
The rules require states to publicly disclose provider payment rates for managed care plans compared with fee-for-service each year as well as compare Medicare and Medicaid payment for certain services.
With the new notice, the administration is focused on establishing better consistency and accuracy of the drug information reported and ensuring stronger data collection. The administration is looking to supplement the Inflation Reduction Act with increased drug transparency.
The CMS will accept public comments on the proposed rule through July 25.