Washington, D.C. (March 9, 2022): Today the Council for Affordable Health Coverage (CAHC) through its Campaign for Transformative Therapies issued a new white paper describing the projects states are undertaking that tie the reimbursement of a prescription drug to its effectiveness. Ten state Medicaid programs (AL, AZ, CO, MA, MI, NC, OK, TX, LA, and WA) have been approved by CMS to enter into OBAs with manufacturers, and additional states have recently requested clearance to participate. OBAs are also known as Value-Based Payment (VBP) arrangements.
OBAs are agreements between payers and manufacturers that tie reimbursement to a drug’s effectiveness. Should it be determined the drug is not successful because the patient did not meet predetermined outcomes, the manufacturer rebates, refunds, or repays money back to the payer. Payers would only be responsible for paying for therapies that improve patient outcomes, which would reduce wasteful spending in the system by delivering the right care to the right patient at the right time.
In finalizing its recent rule allowing for VBPs, CMS estimated that the uptake of the arrangements will save states and the federal government $228 million over three years. Despite CMS addressing best price issues through the rule, a lack of clarity around AMP reporting and the Anti-Kickback Statute remain as barriers to widespread adoption.
CAHC supports Congressional action that eliminates these regulatory barriers so all payers have the clear ability to enter into these arrangements.