Legislation sponsored by Sen. Troy Singleton, D-7th District, which would establish a three-year Medicaid demonstration project to pay for certain drugs according to an outcome-based system, cleared the Senate Health, Human Services and Senior Citizens Committee on Monday.
“It’s no secret that drug prices have increased to a level where most families are unable to afford specialty medicines. This has coincided with increased spending for Medicare and Medicaid. In response, manufacturers have started to offer outcome-based contracts, in which rebate levels are tied to a specified outcome in the target population,” said Singleton in a statement.
“These manufacturers have found that prices have actually decreased for the targeted populations, helping them afford their medicines. If we offered a similar, short-term program, we could figure out if that system also works here in New Jersey,” said Singleton.
Senate bill 975 would require the Department of Human Services to establish a three-year demonstration project to employ outcome-based payment systems for a limited number of prescription drugs covered under the program. The department would enter into purchasing or rebate agreements with the manufacturers of at least three different prescription drugs. The agreement would provide that the total reimbursement paid by the state for such drugs would be based in some part on observed outcomes of drug use in patients.
The drugs selected for the demonstration program would have specific therapeutic purposes and would be among the highest-cost drugs in the New Jersey Medicaid program for total spending. The department and the manufacturer of each drug selected would agree to specific performance targets and methods of monitoring performance.
The bill was released from committee by a vote of 9-0.