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Changes in Medicaid’s Best Price Rule Likely to Boost Value-Based Purchasing Agreements

 

 

Beginning July 1, 2022, according to a final rule released by the U.S. Centers for Medicare and Medicaid Services (CMS), drug manufacturers will be able to report varying “best price” points (that is, multiple best prices) for a covered drug to the Medicaid Drug Rebate Program, provided they’re pursuing a value-based purchasing (VBP) arrangement that aligns pricing with outcomes-based clinical and economic measures, such as positive clinical benefits, improved quality of life, fewer physician visits, and reduced hospitalizations. Partnering with Lyfegen may be the solution for manufacturers and payers alike, as its platform can put users on the right track towards successful implementation of VBPs.

 

Since 1990, the statutory Medicaid rebate has ensured that states obtain lower net prices for pharmaceuticals. For brand name drugs, the rebate is 23.1% of Average Manufacturer Price (AMP) or the difference between AMP and “best price,” whichever is greater. Here, best price is defined as the lowest available price to any wholesaler, retailer, or provider, excluding certain government programs, such as the Department of Veteran Affairs program. The AMP is the average price paid to drug manufacturers by wholesalers and retail pharmacies. It is proprietary and therefore not publicly available.

The best price stipulation can, however, hamper manufacturers and payers who wish to experiment with value-based arrangements. Suppose a drug manufacturer offers a payer a 100% money-back guarantee for a treatment it is launching. Then, in case the treatment being sold is ineffective, this would imply the possibility of a Medicaid best price of zero dollars. In turn, this would require that the drug be given away free of charge to every state Medicaid program.

The new rule allows manufacturers to report multiple “best prices” for a single dosage form and strength of a therapeutic, provided the prices are tied to one or more VBPs. Further bolstering the rule is proposed bipartisan legislation – Medicaid VBPs for Patients Act – which, if passed, would codify the best price rule. Importantly, the reporting of multiple best prices under different VBPs does not impact the best price for sales outside of the VBPs.

Drug manufacturers and health insurers have long considered linking reimbursement of certain treatments, particularly cell and gene therapies, to health outcomes. Here, VBPs tie reimbursement to the actual benefits that patients receive. Accordingly, VBPs alleviate the significant risk payers take on when they reimburse the high upfront costs of cell and gene therapies; treatments which still need to demonstrate durability over time. However, drug makers and insurers have been stymied by the Medicaid best price rules. The CMS rule change aims to encourage insurers to negotiate value-based outcome deals with drug makers.

For the sake of illustration, suppose a manufacturer has a $2,000,000 gene therapy to treat a rare disease, and is willing to sign a contract which stipulates that the treatment will have its intended therapeutic effect in 80% of the patients who take it. In the VBP, the manufacturer agrees to provide a payer with an 80% rebate if a patient or subgroup of patients does not respond positively to the therapy.

In the event of treatment failure, as a signatory to the Medicaid Drug Rebate Program subject to the best price requirement, the manufacturer would be forced to extend the 80% discount – the best price of the therapy in this case is $400,000 - to the entire Medicaid program, nationwide, because it represents the best price offered to all relevant U.S. purchasers.

Under the new approach in which multiple best prices can be used, as the manufacturer of a $2,000,000 gene therapy, it can structure a VBP with a payer that promises an 80% rebate in the event a patient or subgroup of patients fails to meet pre-specified clinical outcomes. But, for the drug maker the good news is that the 80% discount will not trigger an 80% best price across all Medicaid programs.

It’s hoped that beginning in July 2022 manufacturers in the U.S. will be more willing to negotiate VBPs with payers, including Medicaid. When the rule goes into effect this summer, Lyfegen will be ready to assist companies establish successful VBPs.

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About the Author

Cohen is a health economist with more than 25 years of experience analyzing, publishing, and presenting on drug and diagnostic pricing and reimbursement, as well as healthcare policy reform initiatives. For 21 years, Cohen was an academic at Tufts University, the University of Pennsylvania, and the University of Amsterdam. Currently, and for the past five years, Cohen is an independent healthcare analyst and consultant on a variety of research, teaching, speaking, editing, and writing projects.

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How to Choose the Right Drug Rebate Management Solution

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How to Choose the Right Drug Rebate Management Solution

Managing drug rebates effectively is critical for ensuring financial sustainability while maintaining patient access to essential treatments. With the rising complexity of rebate agreements and the increasing administrative burden on payers and healthcare systems, selecting the right drug rebate management solution is more important than ever. In this blog, we’ll explore key factors to consider when choosing a solution and how Lyfegen’s advanced rebate management platform can streamline the process and optimize financial performance.

The Growing Complexity of Drug Rebate Management

The pharmaceutical industry is shifting towards more intricate pricing and reimbursement models, with value-based agreements, outcome-driven pricing, and performance-based contracts becoming the norm. As a result, healthcare payers and providers need robust systems to accurately track, claim, and optimize rebates.

Traditional rebate management processes—often manual and reliant on spreadsheets—are inefficient and prone to errors, leading to missed rebate opportunities and financial leakage. A modern rebate management solution should offer automation, transparency, and scalability to address these challenges effectively.

Key Features to Look for in a Drug Rebate Management Solution

When evaluating rebate management solutions, payers and healthcare organizations should prioritize the following features:

1. Comprehensive Contract Compliance and Accuracy

Ensuring that all rebates are accurately calculated and claimed according to contract terms is fundamental. Many organizations miss out on significant rebate revenue due to errors in claim tracking, missed deadlines, or lack of visibility into agreement terms. A robust rebate management solution should offer real-time tracking, validation checks, and automated claim submissions to ensure full compliance and minimize financial losses.

2. Automation to Reduce Administrative Burden

Manual rebate processing is time-consuming, resource-intensive, and susceptible to human error. Automating rebate management can significantly reduce administrative costs while improving efficiency and accuracy. The right solution should provide automated data input, mapping, reconciliation, and dispute resolution, ensuring that rebates are processed smoothly without manual intervention.

3. Centralized Agreement Management

Managing multiple rebate agreements across different pharmaceutical manufacturers, products, and therapeutic areas can be overwhelming. A centralized platform allows users to track, update, and analyze agreements in one place, offering a structured repository for easy access to contract details, claims history, and invoicing records. This reduces the risk of mismanagement and enhances visibility across departments.

4. Secure and Transparent Data Sharing

Effective rebate management requires seamless collaboration between payers, manufacturers, and internal teams. A robust solution should offer secure data-sharing capabilities while maintaining privacy compliance. Role-based access control, encrypted transmissions, and audit trails help ensure that sensitive financial and patient data is protected while enabling necessary stakeholders to access relevant information when needed.

5. Forecasting and Analytics for Better Decision-Making

Beyond rebate tracking, a solution should provide actionable insights through analytics and forecasting. Organizations need visibility into past trends and future rebate expectations to make informed financial decisions. A comprehensive platform should offer reporting dashboards, real-time financial modeling, and historical data comparisons to support strategic planning and contract negotiations.

Why Lyfegen?

Choosing the right rebate management solution is not just about compliance and automation—it’s about unlocking financial opportunities and maximizing the impact of negotiated agreements. Lyfegen’s Rebate Analytics Platform (ARA) is designed to:

  • Ensure full contract compliance by accurately identifying and claiming all eligible rebates.
  • Reduce administrative burden by automating rebate calculations, validation, and dispute resolution.
  • Centralize agreement management with a secure, intuitive platform.
  • Facilitate transparent data-sharing with built-in security measures.
  • Provide robust analytics and forecasting for data-driven decision-making.

With automated data input, mapping, and validation, Lyfegen's ARA streamlines rebate calculations and dispute resolution. Customers using Lyfegen’s platform have identified up to 30% of missed rebates while reducing administrative workload by up to 97%.Additionally, Lyfegen’s solution offers real-time simulations, predictive modeling, and scenario comparisons, allowing payers and healthcare organizations to proactively assess financial impacts before finalizing agreements.

The Time to Act Is Now

With increasing pressures on healthcare budgets and the complexity of drug rebate agreements, organizations cannot afford inefficiencies in rebate management. Lyfegen’s solutions empower payers and healthcare organizations to simplify the process, recover lost revenue, and optimize financial performance.

Book a demo today to see how Lyfegen’s rebate management platform can transform your approach to drug contracting and financial optimization.

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Lyfegen and EVERSANA Collaborate to Revolutionize Drug Pricing and Access with AI-Driven Insights

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Lyfegen and EVERSANA Collaborate to Revolutionize Drug Pricing and Access with AI-Driven Insights

Basel, Switzerland –28, January 2025 -  Lyfegen, a global innovator in drug market access, pricing, and rebate management, has announced a transformative collaboration with EVERSANA®, a leading provider of global commercial services to the life sciences industry, to revolutionize drug pricing and access through artificial intelligence-driven insights.  

By combining data and information from the global pricing and market access platform, NAVLIN by EVERSANA®, with Lyfegen’s Public Drug Agreement Library, the two organizations will harness cutting-edge AI to empower market access and pricing professionals and payers with actionable insights. The joint agreement marks a key step in tackling rising drug costs and improving patient access globally.

Simplifying Complexity with AI

Drug pricing and access are increasingly difficult to navigate, with healthcare payers and pharmaceutical companies facing inefficiencies, missed opportunities, and delays in delivering therapies to patients.

The collaboration combines two leading platforms to address these challenges:

  • NAVLIN by EVERSANA: The industry’s most comprehensive platform, delivers real-time access to global price and access data across 100+ countries and 50+ HTA bodies.  
  • Lyfegen’s Public Drug Agreements Library: A repository of over 7,000 public access agreements, recognized as the world’s most complete repository, delivering real-world strategies for smarter decision-making.

Together, these tools deliver a 360-degree view of pricing trends and access frameworks, enhanced by AI-driven capabilities. This integration helps users:

  • Efficiently link Public Drug Agreements and Price & Access Data in one environment.  
  • Discover agreements tailored to specific market needs.
  • Streamline decision-making using predictive analytics.
  • Quickly adapt to changing market trends and regulations.

Driving Smarter and Fairer Decisions  

Together, Lyfegen and EVERSANA will empower market access teams to make smarter, faster, and more equitable decisions. By combining AI-driven insights with robust data, payers and pharmaceutical companies can reduce inefficiencies and ensure patients receive timely access to life-saving therapies.
 

“Together with Lyfegen we can harness the power of AI to address one of the biggest challenges in healthcare—helping patients get timely access to life-saving medicines,” said Jim Lang, CEO, EVERSANA. “By uniting our expertise and our global pricing innovations, we have the opportunity to deliver a solution that simplifies decision-making and improves access in healthcare systems worldwide.”

A Vision for the Future of Drug Access

The healthcare industry is rapidly adopting AI to drive efficiency and innovation. This partnership positions Lyfegen and EVERSANA at the forefront of this transformation, enabling stakeholders to overcome affordability and access challenges.

“Our mission at Lyfegen has always been to create a more sustainable and equitable healthcare environment,” said Girisha Fernando, CEO of Lyfegen. “Through this partnership with EVERSANA, we are taking a giant step toward that future. By integrating EVERSANA’s price and access data into our combined offerings, we’re not just solving today’s challenges—we’re building a foundation for a smarter, more efficient drug access and pricing landscape.”

About Lyfegen

Lyfegen is an independent provider of rebate management software designed for the healthcare industry. With the world’s largest repository of drug access agreements and a powerful pricing simulator, Lyfegen helps payers and pharma implement and optimize rebates, reduce administrative effort, and understand financial impacts. Founded in 2018, Lyfegen is headquartered in Basel, Switzerland. Learn more at Lyfegen.com or connect with us on LinkedIn.  

About EVERSANA

EVERSANA® is a leading independent provider of global services to the life sciences industry. The company’s integrated solutions are rooted in the patient experience and span all stages of the product life cycle to deliver long-term, sustainable value for patients, prescribers, channel partners and payers. The company serves more than 650 organizations, including innovative start-ups and established pharmaceutical companies, to advance life sciences solutions for a healthier world. To learn more about EVERSANA, visit eversana.com or connect through LinkedIn and X. 

Media Contacts

For Lyfegen

marketing@lyfegen.com  

For EVERSANA

Matt Braun

Vice President, Corporate Communications

matt.braun@eversana.com  

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