More cost-effective Michigan Medicaid treatment expected with approval of changes to medication contract negotiations

FOR IMMEDIATE RELEASE: Nov. 14, 2018                                                           

CONTACT: Bob Wheaton, 517-241-2112

LANSING, Mich. – Michigan will experience more affordable prescription-based treatment for Medicaid beneficiaries under federal approval announced today of the state’s plan to incentivize drug manufacturers to provide more effective medications.

Michigan became the second state – joining Oklahoma – to gain federal Centers for Medicare and Medicaid Services approval to move forward with negotiating contracts with drug manufacturers that are based on patient outcomes.

The amendment to Michigan’s Medicaid State Plan addresses the impact that innovative and costly new drug therapies are having on state Medicaid programs nationwide. States are required to cover the cost of all products with federal Medicaid rebates. Under outcomes-based contract arrangements, drug manufacturers would be liable for increased supplemental rebate payments to the Medicaid program if the drug did not perform as claimed. 

“This exciting new arrangement has the potential to improve the quality, value and efficiency of drug-based treatments covered by the Michigan Medicaid program,” said Kathy Stiffler, acting Medical Services director for the Michigan Department of Health and Human Services (MDHHS). “This is great news for the 2.4 million Michiganders who are Medicaid beneficiaries.”

MDHHS’s Medical Services Administration submitted the proposed Michigan Medicaid State Plan Amendment to the Centers for Medicare and Medicaid Services on Sept. 25. It was approved today, with an effective date of Sept. 30, 2018. 

“I applaud Michigan’s bold initiative, which will empower the state to demand results from drug companies and seek the best deal for patients,” said Seema Verma, administrator of the Centers for Medicare and Medicaid Services. “As we see innovation in biomedicine, it is incumbent on us to also develop innovative payment policies – as Michigan is doing today – in order to advance President Trump’s priority to lower drug prices.”

# # #