CMS NEEDS STRONGER POLICY TO CURB MEDICAID PRICING 'LOOPHOLE,' SENATORS SAY
The Centers for Medicare & Medicaid Services (CMS) must strengthen its guidance regarding an exception to Medicaid price-reporting requirements to prevent drug companies' abuse of that provision, key lawmakers say.
Drug companies are taking advantage of the nominal price exception (NPE) to Medicaid's drug rebate program to increase their market shares, Sens. Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa) wrote in a Jan. 31 letter to the agency. But the proposed rule the agency issued last December does not go far enough to stop this practice, they added.
Under the rebate program, drugmakers that want their prescription drugs covered by state Medicaid programs must enter into an agreement with HHS to pay a rebate based on the total amount of each covered outpatient drug paid for by Medicaid. To participate in the program, a drug company must report to the government its best price, which is the lowest price its drug was sold for to any purchaser in the U.S.
But Congress wanted to encourage manufacturers to continue their practice of offering deep discounts to charitable organizations, so it created the NPE, which exempts certain prices from the reporting requirements.
Their recently completed study showed that instead of using the NPE for charitable organizations, as Congress intended, most of the companies applied the exemption to hospitals purchasing some of the best-selling classes of drugs, the senators said. Companies seemed to do this to gain a competitive advantage over other manufacturers, the lawmakers concluded. The NPE has been used "primarily as a competitive or marketing tool," instead of being used for charitable purposes, as intended by Congress.
Baucus and Grassley, the chairman and ranking minority member of the Senate Finance Committee, are requesting that the agency comment on these concerns by Feb. 15. Their committee oversees the Medicare and Medicaid programs.