Singleton Bill to Establish Temporary Outcome-Based System for Medications Clears Committee

Trenton – Legislation sponsored by Senator Troy Singleton, 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 today.

“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,” said Senator Singleton (D-Burlington). “In response, manufacturers have started to offer outcome-based contracts, in which rebate levels are tied to a specified outcome in the target population.

“These manufacturers have found that the 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,” continued Singleton.

The bill, S-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 the drugs 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.