Cell and Gene Therapy Access Model from CMS Offers New Perspective to Value-Based Purchasing Agreements
Will the involvement of a federal agency change the progress of value-based purchasing in the Medicaid program? The 2024 calendar year will provide insight into whether this intervention will expand opportunities for states and manufacturers.
A Brief History of Medicaid Value-Based Contracting
In 2022, Executive Order 14087 directed the Department of Health and Human Services (HHS) to explore methods to lower drug prices and promote access to innovative drug therapies in Medicare and Medicaid. This directive included mention of the use of value-based payment, a rebate contracting method first introduced in Medicaid by Oklahoma in 2018 but available to all states. In response to the President’s order, HHS proposed three programs. One of these programs was the Cell & Gene Therapy (CGT) Access Model, a value-based purchasing agreement program led by the Center for Medicare & Medicaid Services’ (CMS) Innovation Center. The primary target population is Medicaid and expansion Children’s Health Insurance Program (CHIP) recipients. HHS planned to execute contracts starting in 2026.
CMS conducted many discussions with state Medicaid programs, manufacturers, and industry experts about the possibilities with value-based purchasing agreements since the program’s inception. In June 2023, CMS participated in Crossroads: An Artia Solutions Conference as part of a panel addressing high-cost drug therapies. With its research complete, CMS publicly identified sickle cell disease as the first foray of the CGT Access Model in January 2024. With this announcement, the program marked a contract effective date target of January 2025, a full year ahead of schedule. One possible influence for this change in timeline is the number of CGT applications expected at the Food & Drug Administration (FDA) in the near future.
CMS Introduces Its Methods
Since the January 2024 announcement, CMS has released additional program details via press release, fact sheet, and webinar. The process for voluntary sickle cell disease rebate negotiations begins with the states’ opportunity to submit to CMS a Letter of Intent (LOI). This indicates a state’s willingness to explore options presented by CMS following its negotiations with manufacturers. Any Medicaid Drug Rebate Program (MDRP)-participating entity (which describes all states, the District of Columbia, and Puerto Rico) may participate in the CGT Access Model. The LOI does not bind a state to participation in the resulting contracts but permits it to continue involvement in the process. April 2024 is the submission deadline for state LOIs.
In May 2024, CMS will send a Request for Applications (RFA) to manufacturers which participate in the MDRP and market an FDA-approved product for the treatment of sickle cell disease. Those manufacturers that express interest can enter negotiations with CMS through November 2024. Following that period, CMS will communicate any contractual terms to states. Starting in December 2024, it is the states’ turn to consider submitting a RFA to CMS in order to access the terms of the agreement negotiated by CMS. Applying states will use the financial and market access terms provided by CMS to contract directly with the manufacturer, with a contract start date ranging from January 2025 to January 2026. In addition to contract execution responsibilities, states will also provide reimbursement for contracted cell and gene therapies through the pharmacy benefit. This may require a change in approach by states that continue to pay for physician-administered drugs solely through the medical benefit and/or diagnosis-related groups (DRGs).
Is the Juice Worth the Squeeze?
Included in CMS outreach on the CGT Access Model is its intent to assist states with funding for participating states. A Notice of Funding Opportunity (NOFO) will be released in mid-2024. States that are awarded funds can certainly apply them toward health equity, according to CMS. What is not yet clear is whether CMS funds can be applied toward the administration of value-based purchasing agreements. Despite the capability of each state Medicaid program to enter into these agreements since at least 2018, only 23 states possessed a CMS-approved value-based purchasing agreement contract template as of January 2024. Many of those 23 states have executed one or less such agreement, as well. Factors contributing to this low uptake include the up-front expense of monitoring contract outcomes, technology changes related to rebate calculations and invoicing, and the inability of states and manufacturers to agree on meaningful contract terms. States that respond to the NOFO can be notified throughout 2025 of how CMS will assist financially.
Through CMS interactions with state Medicaid programs in early 2024, expect a number of states to support CMS’ effort by submitting a LOI. This will provide CMS with leverage as it attempts to agree to terms with eligible manufacturers in the sickle cell disease space. However, states with large Medicaid populations and/or more negotiating experience may continue to work with manufacturers on their own over the coming year to keep their contracting options open. Michigan announced in March 2024 that it has already executed its own value-based purchasing agreement with one of the manufacturers of sickle cell disease gene therapy. The next point of interest will be December 2024, when states will find out the terms of any agreements from CMS and decide whether or not to access them. In the meantime, California, Florida, or many of the 29 states without CMS-approved value-based purchasing agreement contract templates would provide CMS with additional leverage by submitting one to CMS for approval.
Artia Solutions will continue to monitor this potentially significant development and provide guidance to clients on how they should approach this opportunity. Please contact us with questions.
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Cell and Gene Therapy Access Model from CMS Offers New Perspective to Value-Based Purchasing Agreements
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