OBJECTIVES: In October 2019 and June 2020, the Centers for Medicare & Medicaid Services (CMS) announced legislation overhauls to drive the implementation of value-based pricing agreements (VBPAs). We aimed at understanding not only the challenges posed by current legislation, but also the proposed reforms in the draft consultations.

METHODS: We reviewed the draft consultations for reforms to the Social Security Act, the Stark Law and the Anti-Kickback Statute. We also conducted a targeted review of published literature and news articles, in order to explore industry and analyst views on the current challenges and proposed solutions.

RESULTS: The Anti-Kickback Statute and the Stark Law may prohibit arrangements that are designed to enhance care coordination, improve quality, and reduce waste. On the other hand, under the Medicaid Drug Rebate Program, manufacturers negotiating outcomes-based agreements (OBAs) with US payers could be liable to an excessively low best price when outcomes are not met within the best-price quarterly review period. The Social Security Act updates proposes (1) a new best-price definition for OBAs, where VBPAs may qualify as a bundled sale; (2) Extended timeframe for best price revision for VBPAs beyond the current limit of three years; (3) Implementation of multiple reported price points for one dosage form and strength, depending on the outcome and (4) Systematic data sharing of State-run VBPAs. Proposed changes to the Stark Law and the Anti-Kickback Statute aim at introducing a series of exceptions for VBPAs, allowing healthcare providers to design and enter into VBPAs without fear of inadvertently violating the law.

CONCLUSIONS: Once approved, the proposed legislation updates are expected to allow the CMS to negotiate innovative VBPAs and provide manufacturers with improved guidance to negotiate agreements with US payers. As the consultations are finalized, more information is expected to be available at time of presentation.