Drug manufacturers: value-based arrangement.

Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services, including prescription drugs that are subject to the Medi-Cal List of Contract Drugs, pursuant to a schedule of benefits. The Medi-Cal program is, in part, governed by, and funded pursuant to, federal Medicaid program provisions. Existing law provides that the department is the purchaser of prescribed drugs under the Medi-Cal program for the purpose of enabling the department to obtain from manufacturers of prescribed drugs the most favorable price for those drugs furnished by those manufacturers, based upon the large quantity of the drugs purchased under the Medi-Cal program, and to enable the department to obtain from the manufacturers discounts, rebates, or refunds based on the quantities purchased under the Medi-Cal program. Existing law requires the department to contract with manufacturers of single-source drugs on a negotiated basis, and with manufacturers of multisource drugs on a bid or negotiated basis. This bill would authorize the department to enter into a value-based arrangement, including a rebate, discount, or price reduction, with drug manufacturers based on outcome data or other metrics, as determined by the department and the drug manufacturers, pursuant to those contracts. The bill would require the department to report to the Legislature, on or before July 1, 2022, on how value-based arrangements may be implemented in the Medi-Cal program.