CMS Approves Louisiana State Plan Amendment for Supplemental Rebate Agreements Using a Modified Subscription Model for Hepatitis C Therapies in Medicaid

CMS NEWS

For Immediate Release
June 26, 2019

Contact: CMS Media Relations
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CMS Approves Louisiana State Plan Amendment for Supplemental Rebate Agreements Using a Modified Subscription Model for Hepatitis C Therapies in Medicaid State Plan Amendment permits Louisiana to negotiate supplemental drug rebates to assist the state in controlling expenditures for hepatitis C drugs while providing unlimited access to the therapies

Today the Centers for Medicare and Medicaid Services (CMS) approved Louisiana’s Medicaid State Plan Amendment (SPA) authorizing the state to negotiate supplemental rebate agreements from prescription drug manufacturers. The SPA permits the state to negotiate supplemental rebate agreements using a new “modified subscription” model that initially focuses on antiviral agents for hepatitis C and that promotes eliminating the hepatitis C virus statewide.

As was the case for the recently-approved Washington state value-based purchasing SPA for a subscription payment approach to hepatitis C drugs, supplemental rebates paid by drug manufacturers to states are exempt from the Medicaid “best price” rule.  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.

“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.”

This supplemental rebate agreement will be used by the state for a modified subscription model, allowing Louisiana to cap gross expenditures at a fixed amount for hepatitis C drugs, while providing the state with unlimited access to clinically necessary doses of these therapies for Medicaid beneficiaries.

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.  CMS welcomes proposals from other states for state plan amendments to allow negotiation of single, state-specific supplemental rebates in Medicaid.

For more information, please refer to: https://www.medicaid.gov/State-resource-center/Medicaid-State-Plan-Amendments/Downloads/LA/LA-19-0018.pdf