New CMS rule promotes payer drug price negotiations based on clinical outcomes

CMS issued a proposed rule June 17 that would make it easier for Medicaid to make payment models based on a drug's clinical value. 

The agency said that the cost of innovative new drugs are often very high, and new approaches to payment are needed to allow the market to adapt. 

Current regulations make it hard for drugmakers to report payments under value-based arrangements to the agency. The regulations hinder payers and drugmakers from designing new payment arrangements based on the value a drug provides to a patient and leads to prices based on the quantity of drugs sold rather than the quality of the drug, CMS said. 

"CMS’s rules for ensuring that Medicaid receives the lowest price available for prescription drugs have not been updated in thirty years and are blocking the opportunity for markets to create innovative payment models," said CMS Administrator Seema Verma. "By modernizing our rules, we are creating opportunities for drug manufacturers to have skin in the game through payment arrangements that challenge them to put their money where their mouth is."

The new proposed rule seeks to modernize regulations to encourage innovation and encourage states, private payers and drugmakers to pay for prescription drugs based on clinical outcomes. Basing payment on clinical outcomes could foster innovation and reduce overall healthcare spending and hospital visits, CMS said. 

Read the full news release here

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