Has the Centers for Medicare & Medicaid Services Implicitly Adopted a Value Framework for Medicare Drug Price Negotiations?

The U.S. Inflation Reduction Act of 2022 marked a significant shift in Medicare prescription drug pricing by allowing the Centers for Medicare and Medicaid Services (CMS) to negotiate drug prices with manufacturers. The first ten drugs selected for negotiation include Eliquis®, Jardiance®, Xarelto®, Januvia®, Farxiga®, Entresto®, Enbrel®, Imbruvica®, and Stelara®.  These drugs were chosen based on specific criteria, including years on the market and lack of generic competition, and represent the highest Medicare Part D expenditures. Manufacturers of these drugs have agreed to participate in the negotiation process.

CMS will calculate initial price offers, considering net prices, therapeutic alternatives, and comparative effectiveness. The inclusion of cost-effectiveness evidence is notable, although specific measures like quality-adjusted life years (QALYs) are excluded. CMS's approach to selecting therapeutic alternatives, particularly for drugs with multiple indications, and the integration of evidence across indications remain somewhat unclear. The negotiation process lacks predefined thresholds, emphasizing flexibility but introducing complexity. These actions suggest that CMS is taking steps towards establishing a national value framework for drug pricing in the largest U.S. federal health care prescription drug program, though many details are yet to be defined.

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