Innovative Contracting for Pharmaceuticals and Medicaid’s Best-Price Rule

Rachel Sachs, Nicholas Bagley, and Darius N. Lakdawalla evaluate the argument made by pharmaceutical drug manufacturers that the Medicaid “best price” rule inhibits their ability to enter into value-based purchasing arrangements. The authors conclude that while the best price rule makes the adoption of new pricing models more complex, it is almost always possible for drug companies to restructure their contracts to lessen the impact of the best price rule. The authors also highlight CMS’s demonstrated willingness in offering flexibility and clarity to drug manufacturers as further evidence that Medicaid’s best price rule is not a serious obstacle to pharmaceutical payment reform.

The full study is available at Journal of Health Politics, Policy, and Law.

Citation: Sachs, R., Bagley, N., & Lakdawalla, D. N. (2018). Innovative contracting for pharmaceuticals and Medicaid’s best-price rule.