Administration Announces CMMI Model on Medicaid Drug Discounts, Strikes Deals on MFN Pricing for GLP-1s

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On November 6, the Trump Administration issued two prescription drug pricing announcements aimed at reducing U.S. drug prices to a “most-favored-nation” (MFN) level. First, Center for Medicare and Medicaid Innovation (CMMI) announced a new to test Centers for Medicare & Medicaid Services (CMS)-led drug price negotiations for covered outpatient drugs in Medicaid. In it, participating manufacturers would provide supplemental rebates to state Medicaid programs to lower prices to match certain international prices. In a second development, the White House released a announcing agreements with Eli Lilly and Company and Novo Nordisk that, most notably, are intended to bring down the costs of glucagon-like peptide-1 (GLP-1) medications for Medicare, Medicaid, and direct-to-consumer purchasers. As part of this deal, the Administration will presumably move to reinterpret its longstanding prohibition on coverage of anti-obesity medications in the Medicare and Medicaid programs.

The developments were spurred by President Trump’s May 12 directing his Administration to take various actions to bring American drug prices in line with those paid by similar nations and July 31 to 17 drug manufacturers calling for commitments to bring down prices in the U.S., ensure that “every single Medicaid patient” has access to MFN pricing, offer direct-to-consumer sales, and reinvest in American manufacturing.

With this announcement, five of the 17 manufacturers who received those letters have now struck deals with the Administration, and the new CMMI model seems designed to help facilitate implementation of those deals. It remains to be seen whether manufacturers who have not negotiated such deals will have incentives to participate in the model.

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