Negotiate Drug Prices Research Articles

Estimated Savings From Using Added Therapeutic Benefit and Therapeutic Reference Pricing in United States Medicare Drug Price Negotiations

ObjectivesUS Medicare will begin negotiating prices for top-selling drugs in 2023. This study describes and estimates potential savings from a therapeutic reference pricing approach, linking comparative effectiveness with the costs of existing therapeutic alternatives, that Medicare could use to adjust the starting point for price negotiations. MethodsFirst, we identified target drugs likely to be selected for Medicare negotiation. Second, we identified comparative effectiveness ratings for target drugs based on French Haute Autorité de Santé reports. For target drugs with minor or no added benefit, we identified therapeutic alternatives based on the French reports and US clinical guidelines. For each target drug with minor or no added benefit, we computed the difference between spending based on the drug’s estimated statutory ceiling price and spending based on the weighted average cost of therapeutic alternatives or the lowest cost therapeutic alternative. Finally, we calculated potential annual savings from using a starting point in negotiations based on costs of therapeutic alternatives. ResultsPotential drug-level savings to Medicare from using a starting point in negotiations based on average spending across therapeutic alternatives, compared with using the statutory ceiling price alone, ranged from $186 541 340 to $2 173 441 197. Potential savings from using a starting point based on the lowest cost alternative ranged from $199 872 163 to $3 605 904 765. ConclusionsAlthough we do not expect Medicare to rely on French comparative effectiveness assessments, this study demonstrates the potential for additional savings when using comparative effectiveness and costs of therapeutic alternatives to inform the starting price for negotiations.

Investments in Research and Development for Supplemental Drug Indications—Implications for Drug Price Negotiations

This Viewpoint compares the research and development costs for a drug’s first indication with supplemental indications to demonstrate that the cost of approval for supplemental indications may be substantially lower.

Effects of volume-based procurement policy on the usage and expenditure of first-generation targeted drugs for non-small cell lung cancer with EGFR mutation in China: an interrupted time series study

ObjectivesIn December 2018, China launched national volume-based procurement (NVBP) to negotiate drug prices with manufacturers. Gefitinib was one of the 25 pilot drugs, which is used for treatment of non-small...

Pharmaceutical pricing and managed entry agreements: An exploratory study on future perspectives in Europe

ObjectivesThis paper illustrates the results of a research aimed at investigating the opinions collected from selected European payers (HTA organisations, authorities/committees assessing, appraising and negotiating drug prices) and experts (researchers/consultants identified through LinkedIn groups) on drug price regulation, managed entry agreements, transparency and HTA advice. MethodsExpert and payer opinions were gathered through a structured questionnaire, validated by three potential respondents and self-administered online between July and November 2021. ResultsRespondents totalled 39 (response rate 29%). The response rate was higher among the experts than the payers. Respondents mostly agreed that price regulation should award drug value through a multiple criteria approach (21 respondents) or cost-effectiveness evidence (14). For most respondents the added therapeutic value and the comparative safety profile should be the main drivers of a premium price. A quite high proportion of respondents supported the use of cost-effectiveness, and suggest relying on the perspective of the health care system. Most respondents expect larger diffusion of outcome-based and financial-based managed entry agreements in the future. Finally, respondents advocated for higher transparency of the negotiation process rather than net price transparency, and expressed the belief that HTA advice could be useful in reaching consensus on the level of unmet need, the comparators to consider, and the dimension of the target population. ConclusionsDespite the limited number of respondents, the paper provides very interesting exploratory insights into much-debated topics related to drug price regulation. The opinions of European payers and experts are very useful for future regulation of drug pricing in Europe. Public interest summaryOur research aimed at gathering the opinions of payers and experts on drug price regulation. The main findings are that pricing should reflect the value of medicines, that a premium price should be awarded only to those drugs that provide for an added therapeutic value and/o a better safety profile, even if other value dimensions (patient preferences and organisational impact) should be not disregarded. Experts and payers expect a larger role of managed entry agreements in the future, despite they may impose an important administrative burden. Finally, transparency of price negotiation is prioritized compared to net price transparency.

National survey of financial burdens and experience among patients with cancer receiving charitable co-pay assistance.

6647 Background: High healthcare costs can pose a barrier to access and contribute to financial hardship among patients with cancer. Charitable co-pay assistance (CPA) foundations provide financial support to patients facing high out-of-pocket costs, but little is known about the sociodemographic characteristics, financial burdens, views and experience of those receiving assistance. Methods: We conducted a national, cross-sectional survey of CPA grant recipients receiving financial assistance from the HealthWell Foundation (charitable CPA foundation) to cover cancer drug costs. The primary outcome of interest was self-reported financial distress (FACIT-COST). Secondary outcomes included measures of out-of-pocket spending, patient perspectives on CPA support, healthcare access and costs, and the impact of financial burden on healthcare utilization. Results: Among 1,108 CPA grant recipients, over 20 cancer types were represented, including 30% with solid tumors and 70% hematologic malignancy. Average age of CPA recipients was 72 (range: 41-92), 60% were male, 88% white, 55% college educated, and 67% had annual income < $60,000. 96% had Medicare (53% Traditional, 43% Advantage, 58% with supplemental insurance), and 66% believed insurance would prevent them from paying high drug costs. However, 54% reported spending > $500 per month on healthcare, with 39% spending > 10% of household income. Among 17% reporting delays in starting therapy due to cost, 28% reported delay > 4 weeks. Overall, 18% reported skipping medical services due to cost, and 24% believed they would not have received their treatment without CPA. On the COST scale, 56% reported mild financial toxicity (COST 14-25) and 27% moderate/severe (COST < 14) despite CPA. In bivariate analysis, younger age, solid tumor, lower income, female gender, higher anxiety and depression (PHQ4), greater comorbidity, and traditional Medicare were all significantly associated with greater financial distress (lower COST scores, P < 0.05 for all). Most (76%) CPA recipients believed that doctors should be aware of costs when making decisions, and 91% supported Medicare negotiating drug prices with manufacturers. With regard to why they required CPA, only 6% attributed it to failure to discuss costs with their doctor, 14% to the healthcare system, 51% to poor insurance coverage, 61% to their financial status, and 82% to high drug costs. Notably, 73% reported a decrease in financial concerns as a result of CPA. Conclusions: In this large national sample of CPA grant recipients with cancer, most had Medicare and believed insurance would shield them from high drug costs, yet many reported delays in starting therapy prior to CPA and ongoing financial distress. CPA may play an important role in securing access to therapy but these findings highlight an ongoing need to address financial toxicity and understand potential disparities in access to CPA.

Variations in global prices of chemotherapy for childhood cancer: a descriptive analysis.

The stark disparity in survival for children with cancer across the world has inspired a global call to expand chemotherapy access in low and middle income countries. Among the numerous barriers to success, a paucity of reliable information regarding chemotherapy pricing hinders the ability of governments and other key stakeholders to make informed budget decisions or negotiate lower medication prices. The aim of this study was to generate comparative price information on both individual chemotherapy agents and comprehensive treatment regimens for common childhood cancers using real-world data. Chemotherapy agents were selected based on their inclusion in the World Health Organization (WHO) Essential Medicines List for Children (EMLc) and their use in frontline regimens for the tracer cancer types prioritized by the WHO's Global Initiative for Childhood Cancer (GICC). Sources included IQVIA MIDAS data, obtained under license from IQVIA, and publicly available data from Management Sciences for Health (MSH). Data on chemotherapy prices and purchase volumes spanning 2012-2019 were aggregated according to WHO region and World Bank (WB) income classification. Cumulative chemotherapy prices for treatment regimens were compared across WB income classification. Data representing an estimated 1.1 billion doses of chemotherapy were obtained for 97 countries: 43 high income countries (HICs), 28 upper middle income countries (UMICs), and 26 low and lower middle income countries (LLMICs). Median drug prices in HICs were 0.9-20.4 times those of UMICs and 0.9-15.5 times those of LMICs. Regimen prices were generally higher for HICs, hematologic malignancies, non-adapted protocols, and higher risk stratification or stage, albeit with notable exceptions. This study represents the largest price analysis to date of chemotherapy agents used globally in childhood cancer therapy. The findings of this study form a basis for future cost-effectiveness analysis in pediatric cancer and should inform efforts of governments and stakeholders to negotiate drug prices and develop pooled purchasing strategies. NB received funding support from the American Lebanese Syrian Associated Charities and Cancer Center Support grant (CA21765) from the National Cancer Institute through the National Institutes of Health. TA received funding through the University of North Carolina Oncology K12 (K12CA120780) and the University Cancer Research Fund from the UNC Lineberger Comprehensive Cancer Center.

HPR63 A Sneak Peek at the Medicare Part D Drugs Likely to be Targeted By CMS for Price Negotiation: Prediction Using Medicare Claims Data

By September 1, 2023, CMS will announce the first 10 Medicare Part D drugs selected for the Drug Price Negotiation Program. “Maximum fair prices” negotiated for these highest-expenditure drugs will go into effect in 2026. As a sneak peek at what may happen, this analysis used Medicare claims data to rank and predict the drugs that CMS may target.

The Inflation Reduction Act: How Will Medicare Negotiating Drug Prices Impact Patients with Heart Disease?

Cardiovascular medications improve health and prevent early death. However, high drug prices reduce the use of these medications and strain the health system. The Inflation Reduction Act (IRA) of 2022 allows Medicare to negotiate drug prices with manufacturers and reduces out-of-pocket drug costs for Medicare beneficiaries. This article explores the potential impact that the IRA will have on the treatment of cardiovascular disease. Cardiovascular disease medications are likely to be selected for price negotiations under the IRA, leading to savings for patients and for Medicare. Recent work suggests that the IRA's reforms to the Medicare Part D drug benefit will meaningfully reduce out-of-pocket costs for important cardiovascular medications. The IRA is expected to impact cardiovascular disease treatments via price negotiations and through the broader access to medications afforded by improvements to Part D coverage design.

Examining Opportunities to Increase Savings From Medicare Price Negotiations

Allowing the US Centers for Medicare & Medicaid Services to negotiate prescription drug prices for Medicare may improve drug affordability. To estimate savings from Medicare price negotiation under the Inflation Reduction Act (IRA) and examine opportunities to increase savings. This cross-sectional, population-based study used data from 2020 Medicare prescription drug claims. The study was conducted and data were analyzed in 2022. Eligibility for Medicare price negotiation under the IRA and alternative criteria. Minimum savings under the IRA's eligibility criteria were estimated and compared with savings within alternative scenarios, including (1) selecting drugs for negotiation based on net spending after rebates rather than gross spending; (2) extending eligibility to drugs with biosimilar or generic competitors; (3) reducing the minimum years since US Food and Drug Administration approval for eligibility; and (4) changing 2 or 3 of these factors. Estimated savings were calculated at different levels of scale-up of price negotiation under the IRA, from 10 Part D drugs in 2026 to 60 Part B and D drugs in 2029. Gross spending was calculated using the US Centers for Medicare & Medicaid Services 2020 Medicare drug spending dashboard. Rebates were estimated using SSR Health data. Information on FDA approvals, generics, and biosimilars was obtained from FDA websites. Under IRA rules, estimated minimum savings from price negotiation in 2026 for 10 Part D drugs would be $3.2 billion. For 2029 for 60 Part D and B drugs, estimated savings were $16.0 billion. Selecting drugs for negotiation based on net rather than gross spending would be associated with estimated savings of $4.6 billion (a 45% increase) in 2026 and $18.9 billion (an 18% increase) in 2029. Including drugs with generic competitors or biosimilars would be associated with an estimated savings of $6.6 billion (a 109% increase) in 2026 and $24.9 billion (a 56% increase) in 2029. Making both changes would be associated with savings of $9.5 billion (a 200% increase) in 2026 and $28.3 billion (a 77% increase) in 2029. A sensitivity analysis suggested that reducing the required number of years since marketing approval by 2 years would be associated with increased estimated savings of 4% when 10 Part D drugs are negotiated and 12% when 60 Part D and B drugs are negotiated. Changing all 3 criteria would be associated with the greatest increase in estimated savings in 2029 (119% increase when 10 Part D drugs are negotiated and 93% increase for 60 Part D and B drugs). The results of this cross-sectional study suggest that adjusting the eligibility criteria for Medicare prescription drug price negotiation to permit inclusion of drugs with biosimilar or generic competitors and selecting drugs based on net rather than gross spending may be a promising approach to substantially increase estimated savings.

Drugs likely subject to Medicare negotiation, 2026-2028.

BACKGROUND: After the passage of the Inflation Reduction Act, Medicare will be able to negotiate drug prices starting in 2026. The Congressional Budget Office has estimated the total savings achieved each year for negotiation but has not publicly identified the drugs anticipated to be negotiated each year. OBJECTIVE: To identify the drugs expected to be negotiated by Medicare in 2026-2028. METHODS: We identify drugs expected to be negotiated by the Centers for Medicare & Medicaid Services in 2026-2028 based on the statutory criteria, Part B and Part D gross spending in 2020, and estimates of when a drug will be subject to generic or biosimilar competition. We also identify the reasons why other high-spend drugs will be ineligible for negotiation. RESULTS: In 2026-2028, we estimate that Medicare will negotiate prices for 38 Medicare Part D drugs and 2 Part B drugs. Combined, the 40 products eligible for negotiation in 2026-2028 accounted for $67.4 billion in gross Medicare spending in 2020. Part D drugs eligible for negotiation in 2026-2028 include 7 inhalers, 8 antidiabetics, 5 kinase inhibitors, and 3 oral anticoagulants. In all but 5 cases, high-spend drugs ineligible for negotiation were disqualified because of generic or biosimilar competition. CONCLUSIONS: Medicare drug price negotiation has the potential to benefit Medicare beneficiaries across some of the most common disease states. By generating the list of drugs likely subject to Medicare negotiation in the initial years, we hope to provider researchers, policymakers, prescribers, and patient advocates with expectations on which drugs are expected to see reductions in beneficiary cost sharing. DISCLOSURES: This work was funded by the West Health Policy Center. Dr Hernandez reports consulting fees from Pfizer and Bristol Myers Squibb, outside of the submitted work.

Trends in antineoplastic drug use, cost and prescribing patterns among patients with lung cancer in nine major cities of China, 2016–2020: a retrospective observational study based on inpatient and outpatient hospital data

ObjectivesIt is unclear whether the use of antineoplastic drugs for patients with lung cancer in China has changed after the implementation of the national drug price negotiation in 2016 and...

Simulated Medicare Drug Price Negotiation Under the Inflation Reduction Act of 2022

The Inflation Reduction Act of 2022 gives Medicare the authority to negotiate prices for certain prescription drugs. Which drugs will be selected and how prices will be negotiated remain unclear. To simulate drug selection and the minimum savings that would have been achieved at statutory ceiling prices if Medicare drug price negotiation had been implemented from 2018 to 2020. In this cross-sectional study, a policy simulation analysis of high-spending prescription drugs in Medicare Part B and Part D that were eligible for negotiation from January 2018 to December 2020 was performed from August 5 to November 20, 2022. Eligibility criteria for selection and discounts afforded by the statutory ceiling prices for negotiation. The main outcomes were characteristics of drugs subject to negotiation and estimated Medicare savings from 2018 to 2020 that would have been achieved through spending at ceiling prices compared with existing net prices accounting for price concessions. Among the 40 selected drugs, 35 were primarily reimbursed through Medicare Part D and 5 through Part B and 10 were biologics. The most common therapeutic classes were endocrine (11), neurologic or psychiatric (5), pulmonary (4), rheumatologic or immunologic (4), and cardiovascular (4). Median time from US Food and Drug Administration approval to selection was 12 years (IQR, 10-14 years). Three drugs faced generic competition in the 2 years between selection and price negotiation. For the remaining 37 drugs, estimated net Medicare spending from 2018 to 2020 was $55.3 billion; spending at ceiling prices would have been reduced by an estimated $26.5 billion, which represented 5% of estimated net Medicare drug spending during those 3 years. In this cross-sectional study, simulating the drug price negotiation provisions in the Inflation Reduction Act of 2022 revealed important limitations, including strict selection criteria and the potential for drugs to become ineligible for negotiation during the 2 years between selection and prices taking effect. Despite these limitations, the policy still delivered substantial savings because ceiling prices offered steep discounts, in part, by erasing excess spending from price increases faster than inflation.

Negotiating Drug Prices in the US—Lessons From Europe

This Viewpoint describes European drug price negotiation practices and compares them with practices in the US.

Impact of the national drug price negotiation policy on the utilization, cost, and accessibility of anticancer medicines in China: A controlled interrupted time series study

China implemented the national drug price negotiation (NDPN) policy to include 17 innovative anticancer medicines in the national reimbursement drug list in 2018. We aimed to assess the impact of this policy on the utilization, cost, and accessibility of anticancer medicines. We obtained monthly medicine procurement data from 1039 hospitals from October 2017 to December 2019. We examined changes in availability, utilization, defined daily dose cost (DDDc), and affordability of the medicines using descriptive statistics and controlled interrupted time series analysis, measuring utilization by defined daily doses (DDDs). Cetuximab and raltitrexed were compared separately for the same indication. The mean availability of 17 negotiated anticancer medicines was 28.78% after the NDPN, amounting to an increase of 25.22%. The availability increased by 7.88% (95% confidence interval (CI) = 4.31%, 11.45%, P < 0.001) immediately and by 1.23% (95% CI = 0.81%, 1.64%, P < 0.001) per month after policy implementation. Compared with the control group, the utilization of the medicines increased by 11.44 DDDs (95% CI = 2.42, 20.46, P = 0.014) immediately and by 3.54 DDDs (95% CI = 2.47, 4.60, P < 0.001) per month after policy implementation, while the DDDc decreased by US$109.09 (95% CI = 68.14, 150.05, P < 0.001) immediately and remained stable thereafter. The results on cetuximab and raltitrexed were similar. Availability and utilization differed among regions in east, middle, and west China. Out-of-pocket costs decreased by 17.35 times the catastrophic health expenditures to 1.99 times, but the affordability ratio for 14 negotiated medicines was still greater than 1. The NDPN policy improved the availability, utilization, and affordability of anticancer medicines. China's experience in NDPN provides a reference for other countries. However, the availability and affordability of anticancer medicines still need further improvement.

Medicare Drug Price Negotiation in the United States: Implications and Unanswered Questions

The United States is a relatively free-pricing market for pharmaceutical manufacturers to set list prices at the product launch. Few drug price controls exist, and federal price negotiation as a policy has historically been politically untenable. After decades of debate on whether the federal government, specifically the Medicare program, should more actively manage drug prices, the US Congress passed legislation authorizing Medicare to directly negotiate prices with manufacturers. The purpose of this article is to describe elements and implementation of the price negotiation provisions and then comment on the potential impacts on payers, innovations, and the pharmaceutical industry. While impacting only a few drugs each year in the beginning, price negotiation in the Medicare program will have secondary and long-term effects in the US market and beyond. It is clear that in the United States, the Medicare market for drugs will no longer be a free-pricing environment in the industry.

Availability and Affordability of Therapeutic Monoclonal Antibodies After the New Medical Reform in Hubei Province, China

In 2017, China launched a new round of medical reform (NMR) to address the inaccessibility of high-priced drugs for patients with serious diseases. This study explored the impact of the NMR on the accessibility and affordability of high-priced monoclonal antibodies (mAbs), and the effective promotion policies after the NMR. We used a standard method developed by the World Health Organization to conduct two surveys on the availability of mAbs and their prices before and after the NMR in the public hospitals in Hubei province, China. By interviewing hospital pharmacy experts, we identified the potential value of the current NMR in improving the access to therapeutic mAbs. The average availability of 13 mAbs increased by 8.1% in the surveyed hospitals of Hubei province after the NMR. The median unit price of 10 mAbs dropped by 34.3%. The average affordability of a treatment cycle of 10 mAbs dropped from 680 days to 298 days of the disposable daily income for a middle-income resident (56.2% reduction). The drug price negotiation of medical insurance inclusion and the promotion of consistent evaluation of generic and original drugs could effectively promote the accessibility of mAbs. However, the zero markup of drug pricing and the limit on the proportion of drug revenues in public hospitals showed certain negative effects on the availability of mAbs. Not all current NMR policies play a positive role in promoting the accessibility of mAbs. To further improve the accessibility of mAbs in the future in China, it is therefore critical to increase the investment in independent research and development of high-quality mAbs, establish localized guidelines for the rational use of mAbs in clinical practice, and have a cost-sharing mechanism for high-priced drugs with multiple stakeholders.

HPR64 Opportunities and Challenges for Innovative Drugs in China

China’s near-universal drug coverage has limitations due to high out-of-pocket costs for patients and poor coverage of innovative, premium-priced medicines. To increase access to high-cost innovative drugs, national drug price negotiations were introduced in 2015. The objective was to describe current opportunities and challenges for innovative drugs in China based on recent evidence from the new reimbursement decision making processes.

Correlation between clinical trial endpoints of marketed cancer drugs and reimbursement decisions in China.

This study aimed to assess whether different clinical trial endpoints in pivotal trials of cancer drugs were associated with reimbursement decisions in China. Cancer drugs marketed before June 30th, 2021 with publicly available technical review reports for application of drug registration on Center for Drug Evaluation (CDE) website were reviewed. The trial design characteristics and relevant clinical outcomes [e.g., overall survival (OS), progression-free survival (PFS) and objective response rate (ORR)] were extracted from the technical review reports, while the reimbursement decisions were reviewed from National Healthcare Security Administration (NHSA) website. The differences in trial characteristics and clinical outcomes between drugs with positive reimbursement decisions and negative ones were compared by hypothesis test (Pearson's chi-squared test, Fisher's exact test, independent samples t-test and Mann-Whitney U test). The correlation between different clinical trial endpoints and reimbursement decisions was analyzed by multivariate logistic regression. There were 112 cancer drug indications included in this study. Among these indications, 76 received a positive reimbursement decision, and the most common primary endpoints of them were PFS (42.1%) and ORR (30.3%). Taking PFS (OR = 7.333) and ORR (OR = 5.271) as the primary endpoints were more likely to receive a positive reimbursement decision compared with OS (P = 0.003). The proportion of drugs marketed with phase I (75.0%) and phase II (85.7%) clinical trials receiving positive reimbursement decisions are significantly higher than those marketed with phase III clinical trials (61.3%, P = 0.043). The magnitude of clinical benefit only had subtle influences (Prisk benefit - OS = 0.627, Prisk benefit - PFS = 0.087, Psurvival benefit - OS = 0.545, Psurvival benefit - PFS = 0.189) on the drug reimbursement decisions, however, the drug prices and clinical needs also made a difference on that. This study found that, in Chinese drug price negotiations from 2017 to 2021, policymakers have focused more on meeting clinical needs and filling therapeutical gaps in National Reimbursement Drug List (NRDL), while requirements for the selection of primary endpoints, clinical trial phases, and clinical benefits have been reduced. In the future, emphasis should be put on the use of surrogate endpoints and clinical benefits.

The impact of zero markup drug policy on patients' healthcare utilization and expense: An interrupted time series study.

To curb the unreasonable growth of pharmaceutical expenditures, Beijing implemented the zero markup drug policy (ZMDP) in public hospitals in 2017, which focused on separating drug sales from hospital revenue. The purpose of this study is to evaluate the impacts of ZMDP on healthcare expenditures and utilization for inpatients. The Beijing claims data of inpatients diagnosed with ischemic heart disease (IHD), chronic renal failure (CRF), and lung cancer (LC) was extracted from the China Health Insurance Research Association (CHIRA) database. The study employed an interrupted time series to evaluate the impacts of ZMDP on healthcare expenditures and utilization. The changes in total hospitalization expenses, health insurance expenses, and out-of-pocket expenses were not statistically significant neither in level change nor in trend change for inpatients diagnosed with IHD, CRF, or LC after implementing ZMDP (all P > 0.05). The Western medicine expenses for the treatment of inpatients diagnosed with IHD significantly decreased by 1,923.38 CNY after the reform (P < 0.05). The Chinese medicine expenses of inpatients diagnosed with CRF instantaneously increased by 1,344.89 CNY (P < 0.05). The service expenses of inpatients diagnosed with IHD and LC instantaneously increased by 756.52 CNY (p > 0.05) and 2,629.19 CNY (p < 0.05), respectively. However, there were no significant changes (P > 0.05) in out-of-pocket expenses, medical consumables, imaging, and laboratory test expenses of inpatients diagnosed with IHD, CRF, or LC. The initiation of the intervention immediately increased the number of inpatient admissions with LC by 2.293 per month (p < 0.05). The ZMDP was effective in reducing drug costs, and the effects on healthcare utilization varied across diseases type. However, the increase in medical service and Chinese medicine expenses diminished the effect of containing healthcare expenses and relieving the financial burdens of patients. Policymakers are advised to take multiple and long-lasting measures, such as provider payment methods reform, volume-based drug procurement, and drug price negotiation to improve the affordability of patients thoroughly.

Getting the Price Right: Lessons for Medicare Price Negotiation from Peer Countries.

The USA pays more for brand-name prescription drugs than any other country and new legislation from August 2022 gives Medicare the authority to directly negotiate certain drug prices with manufacturers starting in 2026-something the federal insurer had been prohibited from doing for its prior history. As the USA prepares for negotiations, we therefore surveyed how comparable industrialized countries use statutory requirements and procedures to negotiate brand-name drug prices. Guidance documents, regulations, government and academic publications were reviewed to identify the process of negotiating drug prices in peer countries that have been cited as potential examples for US payment reform: Australia, Canada, France, Germany, and the UK. Processes for arriving at a final price for a drug generally fall under three approaches: statutory rebates, setting a maximum price, and arbitration between national (public) insurers and manufacturers. Each approach to price negotiation could be adopted by Medicare and reduce spending even if Medicare does not adopt an exclusionary or closed formulary. Much remains to be determined about how the new price negotiation authority in the USA will be implemented, and policymakers can learn from comparator countries' statutory and regulatory strategies for price negotiation.