One of the policies I’m stalking emails from the Centers for Medicare & Medicaid Services (CMS) is the final “Misclassification of Drugs, Program Administration and Program Integrity Updates Under the Medicaid Drug Rebate Program” rule. The draft came out last May and included a policy on the stacking of Best Price, but the final is still MIA. And fingers crossed, I’d love to see it go away entirely.
As you might know, Medicaid gets the “Best Price” for pharmaceutical purchases. That is the lowest price, including discounts and rebates, for a drug available to any private-sector purchaser (not including Medicare Part D). Let’s say a manufacturer gives one insurer a discount of 80%, BAM, that’s now best price for Medicaid. It makes contracting people at pharmaceutical companies very, very important. One contract gone awry and Medicaid liability follows – forever.
With this proposed rule, CMS says that Best Price should include the total discount available throughout the supply chain for any unit of product. For example, currently if a health plan is getting a 50% discount off a drug and that is the biggest discount available – 50% off is the “Best Price.” (Simplified, there are a host of things that go into this all including inflation, etc. but work with me.)
With the proposed policy, let’s say that plan gave a 50% discount and for that plan the wholesaler got 5% and the pharmacy got 2% that total discount would now be considered 50% + 5% + 2% so 57%. Which is why it is called stacking. But even in this case, you couldn’t necessarily look at the biggest discount and follow the other discounts/rebates on that unit of covered outpatient drug because there might be another unit of drug that gets a smaller discount to the plan but larger discount to the wholesaler and/or PBM.
Example of Stacking Best Price
| % Discount | Wholesaler | PBM | Plan | Total |
| Unit A | 5% | 6% | 22% | 33% |
| Unit B | 4.3% | 6.5% | 20% | 30.8% |
| Unit C | 5% | 2% | 15% | 22% |
| Unit D | 4% | 3% | 25% | 32% |
New “Best Price” would be 33% off because of Unit A.
My understanding is that no one tracks prices like this on a per unit discount basis so I’m not sure how operationally feasible any of it is. Add in the removal of a cap on unit rebate amounts effective this past January and I’m left wondering about the overall math on Medicaid sales for a lot of companies. Rumors were swirling that we’d see a final rule in late 2023 but nothing came out. There was a congressional letter opposing the policy so hope springs eternal.