Pharma Sector Rejoices As CMS Decision Unveils Major Regulatory Relief

During the first half of 2024, Model N revealed that 94% of pharmaceutical executives are making preparations to adapt their revenue management programs for anticipated regulatory changes. Among them, 44% expressed particular concern regarding the impact of these changes on Medicaid.

In May 2024, the Centers for Medicare & Medicaid Services decided to delay implementing a provision of rule RIN 0938-AU28. This provision would have mandated pharmaceutical manufacturers to aggregate discounts and rebates when reporting the best price for the Medicaid drug rebate program.Jesse Mendelsohn, a senior VP at Model N specializing in drug pricing and compliance, views this as a positive development for the pharmaceutical sector, given that the provision could have been highly damaging.

Speaking ro Med Ad News, Mendelsohn said that “The Centers for Medicare & Medicaid Services (CMS) made the right decision when it announced it won’t finalize a proposed provision that would have required manufacturers to stack discounts and rebates given to unaffiliated purchasers when reporting best prices for the Medicaid drug rebate program,” Mendelsohn told Med Ad News.He also said that “The provision, combined with the recent removal of the average manufacturer price cap on the unit rebate amount calculation, would have put many manufacturers ‘underwater’ in Medicaid – they’d be paying more in rebates for certain products than what they actually collected from the sale. This revenue loss may have forced manufacturers to leave Medicaid altogether, creating significant hardship for program enrollees who depend on these often life-saving therapies.”

Mendelsohn further added, “The legality of the provision aside, the rule simply didn’t add up. In practice, stacking discounts granted to completely different and entirely unaffiliated purchasers would have created an unreasonable price point that no single customer would have actually received. CMS stated that it intends to collect more information from pharmaceutical companies on pricing calculations before proposing such changes in the future. Again, this is a positive development. Close collaboration between manufacturers and policy makers will ultimately lead to greater compliance with regulations and better price outcomes for consumers.”