Colorado Medicaid Executes Its First Pharmaceutical Value-Based Contracts

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New Medicaid value-based contracts will hold drug manufacturer Novartis accountable for its clinical outcomes

FOR IMMEDIATE RELEASE

March 22, 2022

Media Contacts
Marc Williams

Dept. of Health Care Policy & Financing
720-626-0801 (cell)

Denver, COToday the Colorado Department of Health Care Policy & Financing (Department) announced it has entered into two value-based contracts with Novartis Pharmaceuticals Corporation for its Entresto drug therapy used to treat heart failure and with Novartis Gene Therapies for its Zolgensma drug therapy used to treat spinal muscular atrophy (SMA). Both contracts have an effective date of January 1, 2022. 

With the introduction of new innovative treatments, prescription drug costs have continued to increase for Health First Colorado with a significant impact on program expenditures.  The Department has entered into new contracts that hold drug manufacturers financially accountable to the clinical outcomes demonstrated in clinical trials. These contracts will help deliver savings to state and federal budgets - and taxpayers - in the form of manufacturer refunds when drug therapies do not meet the defined clinical health outcomes for Medicaid members who are taking them. 

These value-based contracts between the Department and Novartis highlight the shared dedication to medication performance, an opportunity to manage program costs for taxpayers and most importantly, a commitment to better health outcomes for Medicaid members.

“The Department is working hard to close health care disparities, improve patient health outcomes and drive better affordability in the Medicaid program. Value-based contracts enable us to financially reward our providers for helping us achieve these shared goals,” said Kim Bimestefer, executive director for Health Care Policy & Financing. “Such contracts also help us hold providers and partners like drug manufacturers financially accountable for the better results we want from them going forward.”

One value-based contract will measure outcomes of patients starting Entresto and provide manufacturer refunds in the form of additional rebates to the Department if hospitalizations are not reduced by at least 20% in qualifying Colorado Medicaid members using this drug therapy.

The other value-based contract pertains to the gene therapy drug, Zolgensma, a one-time treatment for a degenerative disease in infants called spinal muscular atrophy or SMA. Zolgensma has a commercial price of $2.1 million per treatment. This contract allows the Department to recoup a significant portion of the Medicaid price if the drug therapy does not deliver the clinical health outcomes for a five-year period following its use. The Department is committed to addressing rising drug costs and improving infant health outcomes while preserving function and quality of life for members with spinal muscular atrophy through this new contractual agreement.

The Department intends to enter into more value-based arrangements with pharmaceutical manufacturers who recognize the importance of improving health outcomes and driving affordability while saving state and federal dollars on treatments that do not meet patient outcome expectations. Manufacturers are encouraged to send their inquiries to hcpf_Colorado.SMAC@state.co.us.

Learn more about this and other Colorado prescription drug affordability and outcome improvement strategies at “Colorado's Health Cabinet Policy Summit” scheduled for March 24th. Register here.

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About the Colorado Department of Health Care Policy & Financing: The Department administers Health First Colorado (Colorado's Medicaid program), Child Health Plan Plus, and other programs for Coloradans who qualify. For more information about the Department, please visit HCPF.Colorado.gov.