HealthDay News — Medicaid’s best-price rule is not as serious a problem as drug manufacturers imply, although it may affect novel pricing arrangements, according to an article published online in the Journal of Health Politics, Policy and Law.

Rachel Sachs, JD, MPH, from Washington University in St. Louis, and colleagues discussed Medicaid’s “best-price rule” and the extent to which it might frustrate the goal of paying for value. According to the rule, a pharmaceutical company offering a large discount to a payer in any type of contracting agreement must make that same discount available to Medicaid. The rule is triggered when a discount exceeds the mandatory statutory rebate of 23.1%.

Researchers note that the best-price rule may be an impediment to some novel pricing arrangements in the private sector, but there are ways to avoid or mitigate its impact. Drug manufacturers can restructure their contracts to avoid the best-rule impact. Furthermore, the Centers for Medicare and Medicaid Services has some regulatory flexibility to address the issue through enabling indication-based pricing by adjusting the unit-price requirement and by relaxing the rule for Medicare demonstration projects.

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“We conclude that the best-price rule is not as serious a problem as it is sometimes made out to be but that it is also not simply a convenient excuse for refusing to try something new,” the authors write. “The law here is complex, and moving to a pay-for-value model for drugs will require close coordination among manufacturers, payers, and regulators.”

One author disclosed financial ties to Precision Health Economics, which provides research and consulting services to companies in the life sciences and health insurance industries.

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Sachs R, Bagley N, Lakdawalla DN. Innovative contracting for pharmaceuticals and Medicaid’s best-price rule [published online September 28, 2017]. J of Health Politics, Policy, and Law. doi: 10.1215/03616878-4249796