Integrating Price Benchmarks and Comparative Clinical Effectiveness to Inform the Medicare Drug Price Negotiation Program.

OBJECTIVES: By September 2024, the Centers for Medicare and Medicaid Services (CMS) will publicly report the negotiated prices (Maximum Fair Prices) for the first 10 drugs selected for price negotiation. We estimate initial price offers based on net prices, statutorily defined ceilings, and comparative effectiveness data for the 10 drugs and their therapeutic alternatives. METHODS: We utilized net prices and other price benchmarks for the 10 drugs and their therapeutic alternatives. We searched for data on comparative clinical effectiveness for the primary indications. We outlined a range of plausible initial price offers based on CMS guidance and our interpretation of regulatory intent. RESULTS: For ibrutinib and ustekinumab, statutorily defined ceiling prices will likely determine the initial price offers. The integration of net pricing and clinical evidence from comparator branded products will inform the initial price offers for apixaban, empagliflozin, etanercept, and insulin aspart. Rivaroxaban and sacubitril/valsartan have therapeutic alternatives that are generics; therefore, CMS may apply a discount to current net prices. To achieve savings in the negotiation of dapagliflozin and sitagliptin, CMS will have to leverage additional negotiation factors because statutory defined ceilings and net prices of therapeutic alternatives are similar or higher. CONCLUSIONS: This analysis sheds light on important price benchmarks and clinical evidence factors for the determination of the initial price offers. Although we were not able to simulate the offer and counter-offer process, our findings provide a transparent and systematic way to produce initial offers that are consistent with CMS guidance.

Medicare drug price negotiation: The complexities of selecting therapeutic alternatives for estimating comparative effectiveness.

Under the 2022 Inflation Reduction Act, the Centers for Medicare and Medicaid Services (CMS) are able to negotiate prices for topselling drugs in the Medicare Part B and D programs. In determining initial price offers, CMS will compare the prices and clinical benefits of the drugs subject to negotiation to the prices and clinical benefits of therapeutic alternatives. Despite the central role that the selection of therapeutic alternatives will play in the price negotiations, the available guidance published by CMS provides few details about how the organization will undertake this process, which will be particularly complex for drugs approved for more than one indication. To better inform the selection process, we identified all US Food and Drug Administration-approved indications for the first 10 drugs subject to negotiation. Using 2020-2021 Medicare claims data, we identified Medicare Part D beneficiaries using each of the 10 drugs. We extracted medical claims with diagnosis codes for each of the approved indications to report the relative treated prevalence of use by indication for each drug. We reviewed published clinical guidelines to identify relevant therapeutic alternatives for each of the indications. We integrated the evidence on the relative treated prevalence of indications and clinical guidelines to propose therapeutic alternatives for each of the 10 drugs. We describe challenges that CMS may face in selecting therapeutic alternatives.

Drugs anticipated to be selected for the Medicare Drug Price Negotiation Program in 2025.

BACKGROUND: The Centers for Medicare and Medicaid Services (CMS) recently announced the Maximum Fair Price for the first 10 Medicare Part D drugs selected for price negotiation. By February 2025, CMS should announce the list of Part D drugs to be negotiated with implementation of the negotiated prices in 2027. OBJECTIVE: To identify up to 15 Medicare Part D single-source drugs anticipated to be selected by CMS for price negotiation in 2025. METHODS: We followed selection criteria identified in the Inflation Reduction Act and CMS guidance to identify drugs. We projected 2023 Part D gross spending using 2020-2022 data reported by CMS and linear prediction models. We ranked products according to the projected spending figure and identified those not eligible for selection because of (1) number of years since approval, (2) availability of a biosimilar or generic version, (3) approval for a single orphan indication, (4) whole human blood or plasma-derived, or (5) eligibility for the small biotech exception. RESULTS: We identified 13 products likely subject to Medicare drug price negotiation, including 4 anticancer therapies, 3 noninsulin antidiabetic products, 2 inhalers, 1 antifibrotic therapy, 1 gastrointestinal agent, 1 enzyme replacement therapy, and 1 product indicated for dyskinesia. These 13 products each had projected annual gross Part D spending more than $1 billion. We identified 7 additional products with uncertainty to complete the list of 15, including an insulin, an antiviral, an antibiotic, an immunologic agent, an antidiabetic, and 2 cancer drugs. These products had projected gross Part D spending between $877 million and $1.399 billion. Twenty-two products with comparable levels of spending were deemed ineligible for selection because of availability of a generic or biosimilar version (10 products), insufficient years since approval (8 products), eligibility for the small biotech exception (3 products), and expected market discontinuation (1 product). CONCLUSIONS: Our identification of products anticipated to be selected for negotiation in 2025 (with implementation of negotiated prices in 2027) will help inform manufacturers, payers, patients, and policymakers of the products that will likely see a decrease in Medicare drug prices as result of negotiation. We identified 22 products with levels of spending that are comparable with those anticipated to be selected for negotiation but are not eligible, primarily because of generic or biosimilar availability or insufficient time on market.

Price benchmarks of drugs selected for Medicare price negotiation and their therapeutic alternatives.

BACKGROUND: The Centers for Medicare and Medicaid Services (CMS) are currently negotiating prices with pharmaceutical manufacturers for the first 10 Part D drugs selected for Medicare drug price negotiation. Non-publicly available data, including the net prices of selected drugs and their therapeutic alternatives, will play a central role in the determination of the maximum fair prices (MFPs). OBJECTIVE: To estimate price benchmarks involved in the derivation of the starting point of the CMS initial price offer for the 10 drugs selected for Medicare price negotiation. METHODS: For the 10 drugs selected for negotiation, we reported (1) the list price, (2) the net price after manufacturer discounts, (3) the maximum negotiated price based on the minimum statutory discount, and (4) the ceiling of the MFP, estimated as the lowest of the latter 2. We also estimated net prices for therapeutic alternatives to the selected drugs. Net prices were estimated using peer-reviewed methodology that isolates commercial discounts negotiated between payers and manufacturers from mandatory discounts under government programs. All price benchmarks were estimated at the product level, for 30-day equivalent dosing, using 2021 data. RESULTS: 6 products (apixaban, rivaroxaban, empagliflozin, sacubitril/valsartan, etanercept, and insulin aspart) had therapeutic alternatives with lower net prices, which will be integrated with clinical benefit data in the derivation of initial price offers. The other 4 products (ustekinumab, ibrutinib, sitagliptin, and dapagliflozin) had therapeutic alternatives with higher net prices than the drugs selected for negotiation. For ibrutinib and ustekinumab, prices based on the minimum discounts were considerably lower than the estimated net prices and will likely set the starting point of the initial price offer. For dapagliflozin and sitagliptin, the starting point of the initial price offer will likely resemble their existing net prices. CONCLUSIONS: Our analyses identify different negotiation scenarios for the first 10 drugs selected for Medicare price negotiation, based on key elements involved in the derivation of the initial price offer. Our analyses can help improve transparency in the negotiation process, because the CMS is not required to reveal the information used in the derivation of price offers.