Washington approved for modified ‘subscription model’ for prescription drug payment in Apple Health

Washington has become just the fourth state to gain federal approval to negotiate with drug manufacturers for deals that link payment for prescription drugs to the value delivered.

The Centers for Medicare & Medicaid Services (CMS) approved Washington’s proposed Medicaid state plan amendment this week. The approval lays out a framework for Washington to negotiate and enter into manufacturer-specific agreements for drugs purchased for the Medicaid program, and includes parameters around utilization period, outcomes-based benchmarks, population for which the benchmarks will be measured, and evaluation methodology.


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Washington’s first use of this approval will be for purchasing hepatitis C drugs, under a recently announced agreement with drug manufacturer AbbVie.

Under what is often called a “modified subscription model,” Washington will negotiate with AbbVie to pay a set price for a course of treatment up to a maximum expenditure, after which the manufacturer will provide the drugs for a nominal amount.

Under the approval from CMS, Washington may use this same model for other drugs in the future, or could do a different model depending on negotiation with a drug manufacturer.

“Washington is a national leader in the conversation about the high price of prescription drugs, and we are committed to finding more innovative ways to pay for them,” said Gov. Jay Inslee. “Today’s announcement is a big step not only in our efforts to eliminate hepatitis C in Washington, but to use our purchasing power in the future to control costs and improve access to care for those we serve.”

Inslee in September unveiled Directive 18-13  that directs HCA to initiate an innovative strategy to purchase curative hepatitis C virus medications. About 65,000 Washingtonians live with chronic hepatitis C virus. The directive includes roles for many state agencies, including the Department of Health, which is leading a collaborative effort to develop the elimination plan.

“Prescription drug costs are a tremendous driver in our budget,” said Health Care Authority State Medicaid Director MaryAnne Lindeblad. “The approval of this value-based approach to drug purchasing gives us additional flexibility to get the best deal possible, and, over time, will add predictability in our Medicaid prescription drug spending.”

This press release was provided by the Washington Health Care Authority.