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Oklahoma Medicaid approved for drug pricing experiment

Oklahoma will attempt to deploy a first-in-the-nation drug pricing arrangement for use in its Medicaid program.Damon Winter/New York Times

OKLAHOMA CITY — The federal Centers for Medicare and Medicaid Services has approved Oklahoma’s Medicaid program for a first-in-the-nation drug pricing experiment that supporters say could save taxpayer dollars and give patients the most effective medications for their ailments.

Under the ‘‘value-based purchasing’’ program approved in late June, the state and a pharmaceutical company would agree to a set payment if its medication works as advertised, but only a fraction of that if the drug is not as effective as promised.

‘‘When a company signs an agreement, we hope that they’re going to agree to only have us pay for the therapy that works . . . and if it doesn’t work we should get a rebate on it,’’ said Nancy Nesser, pharmacy director for the Oklahoma Health Care Authority, which administers the Medicaid program in the state.


‘‘One thing we’ve learned is that some companies don’t really stand behind their drugs, and it’s kind of scary,’’ Nesser said. ‘‘We’re paying a premium for them and they’re not willing to say that they will work.’’

The companies are not required to take part, but Nesser said several, which she declined to identify, have shown interest and discussions are underway with three. She said she hopes the program can begin by Aug. 1.

‘‘This is a good thing,’’ said Matt Salo, executive director of the nonpartisan National Medicaid Directors Association, which represents state programs. ‘‘It paves the way for states and other payers to start really thinking about how to do value-based purchasing for prescription drugs.’’

The federal waiver would allow Oklahoma to get around a potential obstacle to value-based contracts.

A possible pitfall is Medicaid’s ‘‘best price’’ requirement, which says if any purchaser gets a really good deal on a drug, then Medicaid has to get that lower price too.


Some interpret that to apply to value-based deals as well, Salo said. That means that if a drug didn’t work too well, and a state paid only 10 percent of the original price, then every other Medicaid program could get the drug for that rock-bottom price, too.

‘‘This seems to allow for paying less for a failed treatment without triggering the ‘best price’ requirement,’’ Salo said.

Oklahoma spent about $650 million on prescription drugs in the fiscal year that ended June 30, Nesser said, and the change could save ‘‘a couple of million, maybe.’’

Medicaid patients, primarily children who do not pay for prescriptions and the elderly, whose costs are fixed, would see no pocketbook impact, according to Oklahoma Health Care Authority spokeswoman Jo Stainsby.

‘‘The change we’re looking for is improved health outcomes,’’ Stainsby said.

Oklahoma is ‘‘taking the lead’’ in working to bring down the cost of medications, the AARP director for the state, Sean Voskuhl, said.

‘‘It is a great example of how states can implement change in the absence of reform at the federal level,’’ Voskuhl said.

Associated Press