Under the highly effective Medicaid Drug Rebate Program (MDRP), drug manufacturers must provide substantial rebates to state Medicaid programs in order for their prescription drugs to be covered by Medicaid.  Because of the MDRP, the Congressional Budget Office has found that Medicaid obtains the lowest prescription drug prices, net of rebates and discounts, among other federal programs and agencies including the Department of Veterans Affairs.

As I have written, in May 2023, the Centers for Medicare and Medicaid Services (CMS) issued a new proposed rule related to the MDRP and other Medicaid drug pricing, reimbursement and data collection issues.

CCF has now submitted highly supportive public comments to the proposed rule, focusing particularly on three sound provisions: (1) the proposed drug pricing survey for manufacturers of certain high-cost drugs; (2) the proposed contractual requirements related to pharmacy benefit managers and Medicaid managed care plans; (3) and the proposed clarification of how manufacturers must stack applicable discounts in determining “best price” under the MDRP.

However, in our public comments, we also recommend that, for future rulemaking, CMS should consider exercising its authority to institute drug pricing surveys of a sample of manufacturers each year to better verify the accuracy of the specific pricing information that manufacturers must report under the MDRP.  Currently, CMS has no systematic audit or survey process and effectively relies on whistleblower lawsuits and Office of Inspector General (OIG) audits of individual manufacturers or individual drugs to ensure manufacturer compliance.  Such a proactive survey approach could have the effect of improving manufacturer compliance with the MDRP and leading to greater rebate amounts that reduce federal and state Medicaid prescription drug costs over time.

We encourage you to submit your own comments here by the July 25, 2023 deadline.