Model N reported during first-half 2024 that 94 percent of pharma executives are taking steps to prepare their revenue management programs for upcoming regulatory changes, with 44 percent specifically calling out Medicaid as a concern.
The Centers for Medicare & Medicaid Services announced in May 2024 that it would hold off on a provision to rule RIN 0938-AU28 that would have required pharmaceutical manufacturers to stack discounts and rebates to report a best price for the Medicaid drug rebate program. Drug pricing and compliance expert Jesse Mendelsohn, senior VP with Model N, believes this is a welcome relief to the pharma industry, as the provision would have been potentially calamitous.
“The Centers for Medicare & Medicaid Services (CMS) made the right decision when it announced it won’t finalize a proposed provision that would have required manufacturers to stack discounts and rebates given to unaffiliated purchasers when reporting best prices for the Medicaid drug rebate program,” Mendelsohn told Med Ad News.
“The provision, combined with the recent removal of the average manufacturer price cap on the unit rebate amount calculation, would have put many manufacturers ‘underwater’ in Medicaid – they’d be paying more in rebates for certain products than what they actually collected from the sale. This revenue loss may have forced manufacturers to leave Medicaid altogether, creating significant hardship for program enrollees who depend on these often life-saving therapies,” according to Mendelsohn.
“The legality of the provision aside, the rule simply didn’t add up. In practice, stacking discounts granted to completely different and entirely unaffiliated purchasers would have created an unreasonable price point that no single customer would have actually received. CMS stated that it intends to collect more information from pharmaceutical companies on pricing calculations before proposing such changes in the future. Again, this is a positive development. Close collaboration between manufacturers and policy makers will ultimately lead to greater compliance with regulations and better price outcomes for consumers,” Mendelsohn says.
This article was originally published on PharmaLive.com.
