Oklahoma Medicaid Embraces Value-Based Contracting
October 2, 2018
Oklahoma is leading the nation when it comes to innovative drug pricing approaches. Over the summer, it became the first state to implement what’s known as “value-based contracting” for medications paid for by its Medicaid program.
Value-based contracting, when a drug’s price is based on how much it helps patients, typically takes one of two forms. First, there’s indication-based pricing. This is where the drug’s effectiveness at treating a certain condition, as proven by clinical trials, dictates its cost. The same drug can treat multiple conditions, but may vary in its effectiveness depending upon the condition.
Second, there’s outcomes-based pricing. With this approach, the drug’s price is based on how well a given patient responds. In both cases, the innovative approach can not only save money, but also expand patient access.
Oklahoma is exploring the outcomes-based approach with a long-acting antipsychotic used to treat schizophrenia. The agreement between Oklahoma Medicaid and the therapy’s manufacturer ties the state’s financial benefit to patient adherence. The medication’s cost decreases every other month – so long as the patient refills his or her prescription. The ideal scenario benefits both the state and the patient.
Oklahoma also has established a value-based agreement for a medicine used to treat bacterial skin infections. The state previously required prior authorization for the medication because of its cost. But that requirement is now unnecessary with the new value-based contract in place.
Despite Medicaid receiving a 23 percent discount, most state programs spend billions annually on medications. Rising drug prices and enrollment have states feeling pressure to contain costs. Value-based contracting ties limited health care dollars to positive patient outcomes. It can also enhance access to high-cost, high-value medications.
Other states are following Oklahoma’s lead. Michigan and Colorado, for example, are both considering value-based arrangements.
To learn more, watch “Understanding Value-Based Contracting”.Tags: Cost Value, Innovation, Neurological, Prior Authorization
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