Background

To date, no statutory or regulatory definition of “vaccine” exists for the purposes of the Medicaid Drug Rebate Program (MDRP), creating uncertainty about product classification. Under the MDRP, manufacturers enter agreements with the Centers for Medicare and Medicaid Services (CMS) to provide mandatory rebates in exchange for product Medicaid coverage. Only products that meet the definition of a covered outpatient drug (COD), as defined in Section 1927(k)(2) of the Social Security Act, participate in the MRDP. Vaccines are explicitly excluded from the COD definition and are therefore excluded from the MDRP. As a result, states historically have not been required to cover vaccines for all Medicaid populations, though Medicaid-eligible children can access vaccines free of cost through the Vaccines for Children (VFC) program. For adults, the Inflation Reduction Act requires state Medicaid programs to cover adult vaccines without cost-sharing starting in October 2023. These pathways are intended to provide patient coverage without cost-sharing for all recommended vaccines. However, it is currently unclear to what extent these requirements apply to therapeutic vaccines, such as those used to treat cancer and infectious diseases, and novel, passive immunizations, which deliver antibodies created outside of an individual’s body to stimulate a disease-specific immune response.

Proposed Rule Would Define “Vaccine” for Purposes of the MDRP

On May 26, CMS issued a proposed rule to address drug classification and implement a variety of other programmatic updates in the MDRP. In the rule, CMS proposes defining “vaccine” for the purposes of the MDRP as “a product that is administered prophylactically to induce active, antigen-specific immunity for the prevention of one or more specific infectious diseases and is included in a current or previous [Food and Drug Administration] FDA-published list of vaccines licensed for use in the United States.”

As vaccines are explicitly excluded from the MDRP, any product that does not fall under the finalized definition of a vaccine would be included in the MDRP. CMS’s proposed definition excludes products that provide passive immunization, such as preventive immunoglobulins, as well as therapeutic immunizations (e.g., cancer vaccines). If this definition is finalized as proposed, it would have significant market implications for these novel products, including those currently on the market and the growing pipeline of products anticipated to launch in coming years.

Key Questions About the MDRP Rule and Vaccines

CMS requests comment on the proposed definition, soliciting feedback on whether it appropriately distinguishes between preventive and therapeutic vaccines as well as potential indirect consequences. Comments are due by July 25.

As stakeholders assess the impact of the proposed rule and develop a comment strategy, it will be important to consider key questions related to:

• Patient Access: How would coverage, cost-sharing, and utilization management for passive immunizations and therapeutic vaccines be affected if these products are included in the MDRP?
• Product Pricing: How will inclusion or exclusion from the MDRP affect manufacturer pricing strategy? What are the downstream impacts on pricing across other markets?
• Launch Strategy: How would this proposal impact how manufacturers engage with the FDA and Advisory Committee on Immunization Practices (ACIP)? If the ACIP recommends use of a product that may not be on the FDA’s list, what are the implications for Medicaid coverage?
• Influence on Other Programs: Could codifying a definition of vaccine for the purposes of MDRP set a precedent that could be applied to other programs such as VFC, 340B, and the Vaccine Injury Compensation Program?

How We Can Help

Avalere’s experts in vaccine policy and market dynamics can help stakeholders understand the direct and indirect implications of CMS’s proposal in the Medicaid market and beyond. To learn how Avalere can support you in developing CMS engagement strategies and comment letters to help shape a final rule, connect with us.