Biden signs executive order to increase drug cost transparency

HHS and CMS proposed a policy intended to increase transparency in prescription drug pricing for Medicaid recipients and hold drug manufacturers accountable for costs.

The proposed rule will reduce drug costs for states and the government alike, according to a May 23 news release from CMS. 

Here are the three main provisions of the proposal:

  • Giving CMS and states a drug price verification tool to establish why certain drugs are higher cost to facilitate better negotiating between states and manufacturers.

  • Requiring transparent reporting of drug payment information among third-party contractors such as pharmacy benefit managers.

  • Increasing transparency in how drugs are classified as either brand name or generic to ensure states get rebates to which they are entitled and giving states the ability to verify that manufacturers properly classify their outpatient drugs.

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