Medicare Drug Price Negotiation in the US: Implications, Evidence Needs, and Unanswered Questions

ISSUE: The purpose of this Issues Panel is to describe elements of the new Medicare Drug Price Negotiation Program (DPNP) and then comment on program implementation and potential impacts on US federal and private sector payers, global pharmaceutical innovation, and possible evidence requirements to support the DPNP.

OVERVIEW: The U.S. is a relatively free-pricing market for pharmaceutical manufacturers to set list prices at 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 U.S. Congress passed legislation authorizing Medicare to directly negotiate prices with manufacturers. While impacting only a few drugs each year in the beginning, price negotiation in the Medicare program will have secondary and longer-term effects in the US market and beyond. This Issues Panel seeks to describe the DPNP and explore the potential impacts. Dr. Sullivan will serve as moderator and first provide an overview of the Medicare Drug Price Negotiation Program. He will then introduce the three panelists and describe their roles. Kristi Martin will discuss the methods, evidence requirements and programmatic approaches CMS is considering for implementation of price negotiation and the possible impact of the program on Medicare drug budgets. Dr. Grueger will examine implications of price negotiation on industry innovation as well as global research and development budgets. Dr. Hansen will conclude by discussing other potential consequences, specifically whether Medicare might require new and different forms of evidence from industry. We finish with a Q/A session.