H.R. 7871: MVP Act

A value-based purchasing arrangement is a drug deal with a performance clause: the manufacturer refunds part of the price, or gets paid less, if the patient doesn't reach agreed health outcomes. Commercial insurers already use these contracts. Medicaid has had a harder time, largely because of a pricing rule called "best price."

Under that rule, Medicaid is entitled to the lowest price a drugmaker gives nearly any buyer. Picture a hypothetical $2 million therapy with an 80% refund if it fails: for the patient it didn't help, the effective price is $400,000. Under a single best-price standard, that one refund could set the benchmark for Medicaid rebates nationwide — which is why manufacturers have been wary of offering refunds at all.

H.R. 7871 lets a drugmaker report more than one best price for the same drug when the price depends on whether patients got results, as long as it offers the same arrangement to every state. Federal regulators created a version of this option by regulation; the bill writes it into law and ties the definition to that existing rule.

The bill also sets how these deals are counted in the government's price reports. Refunds, rebates, and withheld payments triggered by a failed outcome must be reflected in the drug's average manufacturer price, the figure that drives Medicaid rebates. A therapy paid in installments — say $3 million spread over five years — must be reported as if the full $3 million were paid up front, so the reported price can't be shrunk by stretching payments out. A matching change keeps those refunds from lowering the average sales price Medicare uses to pay doctors for drugs they administer.

Two practical barriers get addressed. First, refunds from a drugmaker to a state when a patient misses outcomes would be exempt from the federal anti-kickback law, removing a legal question that has hung over these contracts. Second, HHS must tell state Medicaid agencies how to set up these deals for drugs given during a hospital stay, including how states can transfer money among themselves so a patient treated in another state's hospital is handled as if they were treated at home.

HHS and its Inspector General would each have 180 days after enactment to issue the rules and guidance, so the effect would arrive quickly if the bill becomes law. The Government Accountability Office would then report to Congress by June 30, 2029, on whether these deals actually improve access and outcomes, what they do to state Medicaid spending and to the 340B and Medicare Part B programs, and whether states that sit out end up paying more.