OHCA receives OK for drug pricing initiative

Posted on: 9/5/18

The Oklahoma Health Care Authority (OHCA) was notified June 27 that their proposal to become the first state Medicaid agency to move forward with negotiating value-based or outcomes-based contracts with pharmaceutical companies was approved by the federal government.

OHCA submitted the state plan amendment proposal to the Centers for Medicare & Medicaid Services (CMS) on March 29. It was approved with an effective date of Jan. 1, 2018.

“In essence, this means that if a drug does not perform as claimed, the manufacturer will rebate the cost of the drug or another negotiated amount. For example, if a drug claims to keep people out of the hospital and doesn’t, the manufacturer may be liable for the cost of the hospitalization,” said OHCA Pharmacy Director Nancy Nesser.

Value-based contracts tie provider payments to successful clinical outcomes and effectiveness rather than simply paying for the medication. Rising prescription drug costs is one of the catalysts for the OHCA to find innovative ways to reduce Medicaid costs.

“We’re pleased that CMS is allowing us to explore this innovative way of purchasing prescription medication,” said OHCA CEO Becky Pasternik-Ikard. “Our agency’s goal is to provide the best care possible for our SoonerCare members and we believe one way of accomplishing this is by linking outcomes to our health care expenditures.”

OHCA is currently working to identify the most appropriate drugs to move forward with using this approach, before entering into contract negotiations. The agency has initiated talks with 20 companies of which 10 are currently actively engaged in discussions or are in contract negotiations.

For more information from CMS, click here.