The 2023 proposed rule titled “Misclassification of Drugs, Program Administration and Program Integrity Updates Under the Medicaid Drug Rebate Program” includes a provision to amend the definition of Best Price to require manufacturers determining Best Price to aggregate, or “stack,” all price concessions provided throughout the supply chain for a single unit of a drug. This policy change would increase Medicaid rebate liability for some drugs and have spillover effects into other markets and channels, including the commercial market and the 340B drug pricing program. Depending on market responses, changes in Best Price determination could shift market dynamics for stakeholders across the ecosystem, including manufacturers, payers, providers, pharmacies, wholesalers, and patients.

Avalere conducted an analysis to illustrate the potential direct and indirect impacts of the proposed Best Price stacking policy on Medicaid rebate liability across three drug classes: antipsychotics, multiple sclerosis, and oncology.

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Funding for this research was provided by the Healthcare Leadership Council. Avalere retained full editorial control.