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

Abstract

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.

Keywords: CMS; Maximum Fair Price; Medicare Price Negotiation.