The state of Michigan’s Medicaid program is launching a new initiative that would pay only for drugs that have proven their efficacy in treating patients.
Centers for Medicare & Medicaid Services leader Seema Verma made that announcement on Wednesday during remarks at the Biopharma Congress in Washington, D.C. She noted that CMS recently approved the Wolverine State’s proposal, which would allow it to enter into value-based payment agreements with drug manufacturers.
Verma said this is only the second such arrangement in the U.S., following a similar waiver granted to Oklahoma over the summer.
“Michigan’s waiver will empower the state to demand results from drug manufacturers in exchange for paying for medicines,” she said in her speech. “I applaud Michigan’s proposal. As we see innovation in biomedicine, it is incumbent on us to also modernize payment policies.”
She said the pharma industry has expressed a willingness to pursue value-based payment initiatives. Those could take many forms, including drug payments over time only if patients achieve certain clinical outcomes; a shared savings arrangement, based on drugs’ impact toward the total cost of care; and a subscription model that could charge upfront fees in exchange for as many doses as are clinically necessary. “Value-based payment is not a panacea, but it is an important part of our strategy to lower drug prices,” Verma said.
Michigan officials have not yet determined which of those routes it will take in its program, which is retroactive to Sept. 30, Bloomberg reports.
