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CMS Approves Rebate Negotiation, Subscription Model for Hep C Therapy

June 26, 2019

The Centers for Medicare & Medicaid Services (CMS) announced today that a state plan amendment (SPA) for supplemental rebate agreements utilizing subscription model for hepatitis c therapies in Medicaid has been approved.

Per the data from the Centers for Disease Control and Prevention, in 2016, approximately 2.4 million Americans were living with hepatitis c. Numbers have continued to grow and estimates show that roughly 40,000 people in Louisiana’s Medicaid program or its prisons have been diagnoses with the infection. Even more go undiagnosed.

The SPA will allow the state to negotiate supplemental rebate agreements directly with drug manufactures, as well as utilize a new modified subscription model focused on antiviral agent treatments for hepatitis C. The goal is to eradicate the viral infection from the state.

“States are best positioned to meet the needs of their Medicaid beneficiaries, and CMS is committed to giving them flexibility to confront the challenges they face,” said CMS Administrator Seema Verma. “The high cost of prescription drugs is one of the greatest challenges in our healthcare system, and Louisiana’s innovative approach to leveraging a subscription model to promote access to hepatitis C therapy is a great example of how states can lead in designing solutions.”

Similarly, Washington state recently received approval for a value-based purchasing SPA, also utilizing a subscription-based model and rebate negotiation with manufacturers. The supplemental rebates, paid by drug manufacturers, are exempt from Medicaid’s “best price” rule, according to the CMS press release. “This rule requires manufacturers to offer the lowest price for a drug they negotiate with any other purchaser (subject to certain exceptions) to all states in the Medicaid program.”

In Louisiana, the new rebate agreements will permit the state to cap gross expenditures at a fixed amount for hepatitis c treatments, while also granting access to unlimited clinically-necessary doses for Medicaid enrollees.

“The supplemental rebate agreement applies to hepatitis C drugs dispensed both through Medicaid Managed Care Organizations and to fee-for-service beneficiaries in Medicaid, and all supplemental rebates collected will be paid to the state, not to Managed Care Organizations,” concluded CMS in its press release. “CMS welcomes proposals from other states for state plan amendments to allow negotiation of single, state-specific supplemental rebates in Medicaid.”

Edan Stanley 



Centers for Medicare & Medicaid Services. CMS Approves Louisiana State Plan Amendment for Supplemental Rebate Agreements Using a Modified Subscription Model for Hepatitis C Therapies in Medicaid [press release.] 26 June 2019. Accessed June 26, 2019.



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