HHS Releases New Payment Models for Prescription Drugs

February 16, 2023

HHS released on Tuesday, three new payment models that will be tested through the Centers for Medicare & Medicaid Services Innovation Center (CMS Innovation Center) to see whether they lower high drug costs under Medicare and Medicaid. The models are outlined as part of a larger HHS report conducted in response to an executive order signed by President Biden Oct. 14, which gave the department 90 days to develop a plan to lower drug costs. The three test models are:

1. The Medicare $2 Drug List, also called the Medicare High-Value Drug List Model: Test generic co-pay caps ($2 per month/drug) in the Medicare Part D program for a standardized list of generic drugs used to treat chronic illnesses.
2. Cell and Gene Therapy Access Model: Coordinate with state Medicaid agencies to test and create multi-state, outcomes-based arrangements with certain drug manufacturers, which would help patients access these new expensive therapies.
3. Accelerating Clinical Evidence Model: Test payment methods for Part B drugs approved under the FDA accelerated approval pathway to spur timely confirmatory trial completion and improve access to post market safety and efficacy data.

National BIO has voiced support for the first two models, but is critical of the third. The first two address out-of-pocket expenses and “reward the value a medicine brings to the patient…,”said BIO’s Chief Policy Officer John Murphy. However, he notes that the Accelerating Clinical Evidence Model would “penalize companies for utilizing surrogate endpoints in an effort to get groundbreaking and necessary treatments to patients.”

For More on the Models, view the HHS Report »

View BIO’s Full Statement
View HHS Fact Sheet

Read more about the value of the Accelerated Approval pathway