New Proposed Rule Takes Aim at PBMs and Managed Care

The Biden administration issued a proposed rule through the Centers for Medicare and Medicaid Services that aims to increase transparency of prescription drug costs and managed care plan operations for Medicaid enrollees.

It would do this by implementing a new drug price verification survey tool and requiring the inclusion of drug payment information in contracts between Medicaid managed care plans and pharmacy benefit managers. Inside Health Policy notes that the rule will also attempt to improve the Medicaid Drug Rebate Program (MDRP), to work in tandem with drug price controls issued under the Inflation Reduction Act.

The rule follows the directive of President Joe Biden’s executive order on lowering prescription drug costs for Americans, a CMS press release stated. The release also noted that as part of the law, drug companies are required to pay rebates to Medicare when prescription drug prices outpace the rate of inflation. From CMS Administrator Chiquita Brooks-LaSure:

This proposed rule prioritizes CMS’ role as a good steward of Medicaid dollars while also strengthening program integrity and the management of pharmacy benefits for people with Medicaid coverage. We’re committed to preserving access to life-saving treatments and securing fiscal sustainability for the Medicaid program, which remains a lifeline for millions of people.

Associated Press reports that the administration is also planning to conduct a yearly audit to verify prices that pharmaceutical companies charge for pricy Medicaid prescriptions. It will require manufacturers to provide the government with information to support the price it charges states for their Medicaid plans.

Although the surveys will not change the price, the verification of drug prices will allow CMS to look into the payment arrangements of pharmacy benefit managers (PBMs) and managed care plans. According to a CMS Fact Sheet, the surveys can assist states in understanding the extent to which spread pricing is occurring, giving states the option to negotiate prices from a more informed position.