Illustration: Sarah Grillo/Axios
House Democrats are divided over a bipartisan bill to promote value-based purchasing agreements in Medicaid.
Why it matters: Their differences showcase the tension between giving patients more access to innovative therapies and cracking down on ways for drugmakers to inflate profits.
Where it stands: Rep. Anna Eshoo says her Medicaid Value-Based Purchasing for Patients Act would make cell and gene therapies more available and affordable for patients. Rep. Frank Pallone says it would favor drugmakers and could increase costs for state Medicaid programs.
- Energy and Commerce recently approved the bill, with Eshoo and two other Democrats voting for it along with all committee Republicans.
- Health Subcommittee Chair Brett Guthrie is the lead co-sponsor with Eshoo.
How it works: The bill is built on the Medicaid best price policy, which requires drugmakers to give Medicaid programs the best price for a drug that they offer to other purchasers.
- The legislation would allow drugmakers to submit a range of best prices offered under value-based purchasing arrangements as the Medicaid Drug Rebate Program best price, as long as they offer the option to all states.
Drugmakers already have this option under a Trump-era CMS rule, but none had taken advantage of it as of November, according to a Center for Medicare and Medicaid Innovation report.
- The bill would codify the rule, with some changes to prevent value-based arrangements from artificially lowering the average manufacturer price.
What we're hearing: Eshoo and other proponents say value-based drug purchasing will make it easier for payers to cover therapies that target a small number of patients, and it should be encouraged.
- "There is a large number of people in the country that are poised to take advantage of gene therapies," Eshoo told Axios. "That was a was frankly a no-brainer to me, to make this available. ... I don't quite understand the opposition."
The other side: Pallone said during the committee markup that allowing drugmakers to submit several best prices, not just one, would undermine best price protections and shift costs to states.
- "I do not think we should double down on the problematic approach in the Trump-era regulation by preemptively codifying it in federal law," Pallone said during the Energy and Commerce markup.
- "In fact, I plan to encourage the Biden administration to consider repealing this regulation,” he added.
While most committee Democrats voted with Pallone, Eshoo has some allies.
- “I think there's merits on what she's doing and giving [drug companies] the opportunity to prove it out,” Rep. Tony Cardenas, who voted with Eshoo in the committee markup, told Axios. “I talked to her about it a couple of times, and I decided to side with her argument.”
The backstory: The policy has been controversial since it first came on the scene.
- The Medicaid and CHIP Payment and Access Commission said in a 2020 comment letter that the rule could decrease Medicaid drug rebates and therefore increase state Medicaid programs' costs. It would also foist significant administrative burden on states, MACPAC said.
- "[B]est price is not a major barrier to development of VBP in Medicaid and these changes will not necessarily increase the availability of such arrangements," MACPAC's letter states. "There is no guarantee that VBP arrangements will ultimately lead to a lower net price for payers."
- The final CMS rule did not address most of the commission's concerns.
- Changes between the final rule and the amended version of the bill should mitigate concerns about drugmaker loopholes by giving CMS the ability to restrict value-based arrangements that can use multiple best prices, according to Eshoo's staff.
