Proposed Rule Targets PBMs’ Medicaid Practices

In a new regulation released on May 23, the Biden administration proposed increasing drug price transparency reporting by PBMs and pharmaceutical manufacturers supplying Medicaid — and requiring Medicaid managed care organizations to remove pharmacy benefit administration costs from medical loss ratio (MLR) reporting. Experts say the proposed rule is a marginal but meaningful step forward in prescription drug cost containment, but they add that the proposed rule won’t do as much as bills under serious discussion in Congress to rein in controversial PBM business practices such as spread pricing.

The proposed rule, which CMS says in a fact sheet “implement[s] new statutory authorities included in the Medicaid Services Investment and Accountability Act of 2019,” is meant to improve the Medicaid Drug Rebate Program by “proposing new policies that would assure greater consistency and accuracy of drug information reporting, strengthened data collection, and efficient operation of the MDRP.” Per the fact sheet, notable elements of the regulation include:

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Peter Johnson

Peter Johnson

Peter has worked as a journalist since 2011 and has covered health care since 2020. At AIS Health, Peter covers trends in finance, business and policy that affect the health insurance and pharma sectors. For Health Plan Weekly, he covers all aspects of the U.S. health insurance sector, including employer-sponsored insurance, Medicaid managed care, Medicare Advantage and the Affordable Care Act individual marketplaces. In Radar on Drug Benefits, Peter covers the operations of (and conflicts between) pharmacy benefit managers and pharmaceutical manufacturers, with a particular focus on pricing dynamics and market access. Before joining AIS Health, Peter covered transportation, public safety and local government for various outlets in Seattle, his hometown and current place of residence. He graduated with a B.A. from Colby College.

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