MDRP: CMS issues Manufacturer Release on multiple best prices reporting option for VBPs

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MDRP: CMS issues Manufacturer Release on multiple best prices reporting option for VBPs

29 March 2022

Last week, the Centers for Medicare & Medicaid Services (CMS) issued Manufacture Release 116, available here, which provides technical guidance to manufacturers on the multiple best prices (BPs) reporting option for value-based purchasing arrangements (VBPs) under the Medicaid Drug Rebate Program (MDRP). CMS also issued a parallel release to the states, available here.

We previously issued an alert on CMS’s multiple BPs reporting option final rule (Final Rule), which was promulgated on December 31, 2020, available here. The Final Rule will allow the reporting of the multiple price points of a VBP as BP without negatively impacting a manufacturer’s Medicaid rebate liability. The original effective date of the multiple BPs reporting option was January 1, 2022, to give manufacturers, states, and CMS time to implement the necessary system changes, and to allow CMS to issue operational guidance. Later, CMS delayed the effective date of the multiple BPs reporting option by an additional six months to July 1, 2022, which we reported on here.

We provide a summary of the manufacturer release below.

VBP reporting under Medicaid Drug Programs system

To implement the multiple BPs reporting option, CMS will rely on the Medicaid Drug Programs (MDP) system, which is used to facilitate price reporting and rebate calculations for the Medicaid program. The MDP will serve an expanded role with respect to the multiple BPs reporting option to help facilitate VBPs between manufacturers and states.

Manufacturers that elect the multiple BPs reporting option will provide descriptions of their VBP to states through the MDP system. Each VBP listing will include a description of the arrangement, the associated guaranteed net unit prices (GNUPs), and manufacturer contact information. States will access these listings through the MDP system, and states that want to take advantage of a VBP will contact the manufacturer to enter into a state-specific VBP agreement.

While the MDP system will continue to generate the standard Medicaid rebate amount used by states to invoice manufacturers, states will be responsible for calculating and invoicing any additional VBP-associated rebate amounts, similar to the process used to invoice manufacturers for supplemental rebates. CMS will not involve itself in disputes between manufacturers and states regarding VBP invoicing or outcome evaluations.

The release provides additional guidance regarding the MDP system, including information on uploading, reviewing, and selecting VBPs. CMS will provide additional guidance on the data input requirements for reporting multiple BPs once the MDP system module is fully developed.

VBP agreements

A manufacturer that elects the multiple BPs reporting option must offer the associated VBP to all states. CMS notes that it will not be involved in the negotiations or approval of VBP agreements between manufacturers and states, but encourages manufacturers to work with states to make minor adjustments to the terms of such VBPs as needed to address any unique needs of the Medicaid program. If a state chooses to accept the terms of a VBP, the manufacturer will identify the state’s participation in the MDP system and pay the state any additional rebates based on the terms of the arrangement.

A manufacturer may terminate a state-specific VBP only based on the terms of its agreement with that state. Otherwise, a manufacturer may cease its election of the multiple BPs reporting option only on a prospective basis. CMS states that manufacturers are required to continue reporting multiple BPs until all of their state-specific agreements expire.

Calculating the non-VBP BP

Manufacturers that utilize the multiple BPs reporting option must also report a non-VBP BP, so that states that choose not to participate in the VBP can receive rebates based on the non-VBP BP. In the Final Rule, CMS did not address how the non-VBP BP should be calculated where a manufacturer sells the drug only through a VBP such that there is no non-VBP price. CMS states in the release that manufacturers may use reasonable assumptions to determine the non-VBP BP in such a scenario. For example, CMS notes that a “manufacturer could approximate the non-VBP best price by estimating a lowest price available to the payer/provider if no additional discounts based upon outcomes are made under the VBP arrangement.”

Multiple BPs reporting option and the bundled sale policy

CMS revised the bundled sale definition in the Final Rule to make clear that VBPs may qualify as a bundled sale. However, CMS did not explain how the bundled sale policy applies in situations where a manufacturer elects the multiple BPs reporting option. In the release, CMS clarifies that, if a manufacturer elects the multiple BPs reporting option for a VBP that qualifies as a bundled sale, the manufacturer is not required to reallocate the price concessions associated with that VBP under the bundles sale policy.

Payment-over-time arrangements

CMS reaffirms its guidance from the Final Rule enabling manufacturers to enter into payment-over-time arrangements. CMS references its language from the preamble to the Final Rule that “[i]nstallment payments do not represent the price of the drug, but rather a partial payment of the drug’s price. CMS therefore understands that the full price of the drug under all installment payments, rather than just the initial installment payment, should be reflected in the average manufacturer price (AMP) calculation at the time of sale, effectively enabling payment-over-time arrangements.

Impact on 340B ceiling price and average sales price

CMS restates its position from the Final Rule that, in its view, manufacturers should use the non-VBP BP to calculate the 340B ceiling price, and adds that the multiple BPs reporting option should not have significant impact on 340B pricing.

With respect to ASP, CMS simply notes that the Final Rule did not change the Medicare requirements for reporting and calculating average sales price (ASP), and declines to provide any guidance on the impact of the multiple BPs reporting option on reporting ASP.

CMS oversight

CMS will monitor implementation to ensure the new policy encourages manufacturers to offer to states VBPs available in the commercial market, with adjustments to accommodate states’ unique needs. CMS will ensure compliance with the new policy and will consider referring cases to the Department of Health and Human Services Office of Inspector General where concerns arise with manufacturer price reporting under the policy.

CMS expects manufacturers to maintain records associated with their VBPs in accordance with the requirements of the MDRP, including “records that include data and any other materials from which the calculations of the AMP, the best price, customary prompt pay discounts and nominal prices are derived, including a record of any assumptions made in the calculations.”

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As always, it is important that you carefully review the manufacturer release in light of considerations that may be relevant to your organization. Please contact the Hogan Lovells Government Price Reporting Team if you have any questions or concerns.