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Experts Raise Implementation Concerns for IRA-Mandated Medicare Drug Price Negotiation

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Value in Health, the official journal of ISPOR—The Professional Society for Health Economics and Outcomes Research, recently published two groundbreaking commentaries focusing on the Centers for Medicare & Medicaid Services’ (CMS) impending implementation of the Inflation Reduction Act’s (IRA) Medicare Drug Price Negotiation Program. Authored by leading experts in health economics and outcomes research (HEOR), these articles explore critical aspects of the program and pose pertinent questions regarding its execution.

Critical Analysis of Medicare Drug Price Negotiation

In the first commentary, researchers Sean D. Sullivan, Inmaculada Hernandez, Scott D. Ramsey, and Peter J. Neumann analyze the process behind establishing the initial price offer and highlight an underlying value framework shaping this approach. They express concern over the lack of an explicit quantitative approach and note the guidance’s implicit adherence to a value-based structure in evidence collection for setting initial price offers. The commentary stresses the need for greater clarity in therapeutic alternative selection, the integration of evidence across multiple indications, and predetermined thresholds for weighing clinical benefit increments against price increments.

On a similar note, the second commentary, authored by John O’Brien and Jan Hansen, sheds light on CMS’s ambiguous standards and intention to consider nonclinical factors, such as manufacturing costs, in pricing negotiations. They caution that this approach might artificially suppress negotiated prices, potentially undervaluing drugs. The authors express concerns about scientific clarity, the potential impact on patient access, and the development of new treatments, particularly in complex conditions like oncology and rare diseases.

Medicare Drug Price

Empowering HEOR in Shaping Transparent and Evidence-Driven Drug Price Negotiation

Both commentaries highlight the challenges with specific provisions of the law and CMS’s guidance, expressing concern that these factors might lead to negotiated prices that don’t genuinely reflect the clinical benefit and value of selected drugs. The authors offer suggestions for CMS, advocating for leveraging HEOR expertise, gaining proficiency in methods, and establishing two-way communication about evidence valuations.

Moreover, the authors urge HEOR scientists to become more involved in health policy, suggesting ways to engage with CMS and other relevant agencies, advocate for evidence generation, and utilize ISPOR resources to shape policy initiatives. They underscore the need for transparent dialogue, robust research, and reproducible processes in CMS’s approach to drug price negotiation.

These discussions signify a pivotal moment for HEOR scientists to actively contribute to health policy and ensure evidence-driven practices in pricing negotiations. The articles stress the necessity for establishing clear, standardized processes and fostering two-way communication to facilitate meaningful contributions from drug manufacturers and the research community as CMS advances in its decision-making.


Resource: ISPOR, December 05, 2023

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