Prime, Magellan Rx Offer Value Plus to Help States Negotiate Value-Based Contracts for CGTs

Reprinted with permission from MMIT

By Angela Maas

As more and more high-cost therapies, including cell and gene therapies (CGTs), enter the U.S. market, commercial health plans have multiple tools at their disposal to manage these agents. Medicaid plans, however, are limited in what they can do. But a multistate value-based contracting (VBC) tool offered by Magellan Rx Management and its parent company, Prime Therapeutics LLC, is helping Medicaid programs access CGTs and ensuring that the agents’ costs are linked to patient outcomes.

A new Medicaid Pharmacy Insights report, titled The State of Value-Based Contracting: Reinventing the Current Drug Payment Model in Medicaid, notes that Medicaid is usually the largest expenditure in state budgets. States need to be able to offer costly CGTs while also managing their budgets. But various barriers to offering value-based contracts — including a lack of resources to negotiate them, as well as collect data and measure outcomes — have limited adoption of these agreements.

In August 2022, Magellan Rx unveiled a collaboration with COEUS HealthCare, a division of COEUS Holdings, that would “support the accelerated adoption of outcomes-based care and help improve patient access to lifesaving therapies, linking health outcomes to the cost of a drug and the value it provides on behalf of Magellan Rx’s state government programs.” The COEBRA Platform, a SaaS solution, was designed to solve challenges with managing outcomes-based agreements.

Specifically, the offering “interprets large, disparate, real-world data sets and accurately summarizes results. The demonstration of total therapeutic impact on a patient’s illness and the resulting system savings are critical to addressing the needs of unique state Medicaid populations.”

Through the collaboration, Prime and Magellan Rx launched the VBC product MRx Value Plus, which links patient outcomes with drugs’ cost effectiveness, in turn improving patient care. If those outcomes are not met, manufacturers will refund part of drugs’ costs to the state.

The collaboration was revealed shortly after a CMS rule took effect last July. Titled Establishing Minimum Standards in Medicaid State Drug Utilization Review and Supporting Value-Based Purchasing for Drugs Covered in Medicaid, Revising Medicaid Drug Rebate and Third Party Liability Requirements, the final rule improved on CMS efforts to support states’ ability to enter into value-based purchasing arrangements with pharma companies. It also provided regulatory support for manufacturers to enter into such agreements.

AIS Health, a division of MMIT, spoke with Billy Thomas, Pharm.D., senior vice president of PDL and rebate operations at Prime, about VBC for Medicaid plans and the Value Plus offering.

AIS Health: What tools do commercial plans have to manage CGTs that are not available to Medicaid plans?

Thomas: Provider network contracting [for CGTs] is a tool commercial plans have that may not be available to Medicaid plans. Additionally, commercial plans may have access to laboratory test results and electronic medical records data via their provider network contractual relationships. The additional data can be used in manufacturer value-based contracting.

AIS Health: Is VBC different for Medicaid plans vs. commercial plans?

Thomas: Commercial VBC with manufacturers can be different from Medicaid because Medicaid programs represent a single state with a fixed and known population base. A state Medicaid program can make a single coverage decision when participating in innovative payment models like a subscription payment, where a fixed payment is made to the manufacturer to treat as many individuals as possible. Commercial insurers are covering self-insured employers and have fully insured lives where the self-insured employer coverage decisions are made at the employer level.

AIS Health: How has the CMS final guidance changed contracting for Medicaid plans?

Thomas: The new CMS guidance advocates for states and drug manufacturers to contract on a metric other than price, by linking the cost of a drug with the value it provides, via VBC arrangements, particularly for high-cost therapies, like CGT.

AIS Health: Since the launch of Value Plus, have there been any lessons learned so far or outcomes you can share?

Thomas: We are in the implementation phase with several states at this point and expect to have initial outcomes in 2024 (due to duration of the evaluation periods associated with the VBCs). Ease of access to medical as well as pharmacy claims data is key to appropriate evaluation for VBCs and is an important lesson learned to date.

AIS Health: How many Medicaid plans are using Value Plus?

Thomas: Magellan Rx is working with several states using the Value Plus program, and we are in talks with other state Medicaid directors who see the value in coming together to solve for the pressing issue of granting access to CGTs while getting some assurance these novel, high-dollar therapies deliver on their curative intent.

AIS Health: Just to be clear, with Value Plus, are states still responsible for the full cost of a therapy up front and can they then be reimbursed later?

Thomas: Yes. Unlike with traditional therapies, state Medicaid programs must pay the full cost upfront. That is part of what makes this solution so necessary. Value Plus provides assurances that patients will see a cure, or Medicaid will receive a higher rebate if patients do not see a cure.

AIS Health: Also to clarify, does this solution apply to one-time CGTs that cost at least $750,000 and not to lower-cost CAR-T therapies?

Thomas: Our initial focus has been on the cell and gene therapy market due to the current pipeline coupled with the potential one-time cost impact of $500,000 or more to our Medicaid program partners; however, over time, it’s likely new classes of therapies like CAR-T will be evaluated and addressed by value-based contracting.

AIS Health: Is there a limit (e.g., five years) to how long after a treatment is administered that a Medicaid plan can be reimbursed based on health outcomes? If it is multiple years, how is reimbursement determined?

Thomas: It depends on the value-based contract duration that has been negotiated with the pharmaceutical manufacturer. Some contacts have a short duration tied to the clinical studies evaluated during the FDA approval process, while others will be a multiyear effort. Value Plus tracks outcomes at the individualized patient level, leveraging pharmacy and medical data for the duration stated in the value-based arrangement. Value Plus also provides CMS required reporting annually. If the drug fails to meet the stated therapeutic endpoints at any point in the evaluation period, then the negotiated rebate amount will be refunded to the state Medicaid program.

AIS Health: Does Value Plus have any role in determining which Medicaid beneficiaries are appropriate for treatment with a CGT?

Thomas: Not directly. Value Plus is a more downstream tool applied after Medicaid eligibility is verified. However, most states apply strict utilization criteria in advance of authorizing treatment with a CGT.

AIS Health: Does Value Plus actually contract with manufacturers on behalf of Medicaid plans? Can the same contract terms for one treatment apply to multiple Medicaid plans who work with Value Plus?

Thomas: Yes, Value Plus employs contracts with manufacturers that benefit enrolled state Medicaid programs. Our solution leverages a multiple state collective or pooled approach in order to deliver the best value opportunity for our Medicaid partners. This way, multiple states can share in the benefit of the value-based contract offered.

AIS Health: Is there anything I’ve neglected to ask that you’d like to add?

Thomas: Value Plus is one more way we are helping state Medicaid departments manage their financial exposure as more of these ultra-high-cost gene therapies come to market. Value Plus is an additional innovation we have brought to market in the state Medicaid fee-for-service (FFS) market. The Value Plus innovation supports our strategy to bring best-in-class opportunities for our Medicaid program partners to manage their pharmacy benefit and formularies. Value Plus can be leveraged as a stand-alone tool or in addition to our comprehensive preferred drug list management (PDL) services. Today, we are contracted with 26 state Medicaid programs to deliver PDL services and have been the state Medicaid FFS PDL market leader since 2001.