Presentation (CTI)

OBJECTIVES: The Medicare Drug Price Negotiation Program (MDPNP) was introduced to reduce Medicare drug spending. In the first and second rounds, MDPNP negotiated prices for 10 and 15 high-cost, single-source Part D drugs, with negotiated prices taking effect in 2026 and 2027. Using historical spending data, CMS estimated savings of $6 and $12 billion for the first-round and second-round of negotiation, respectively. This study projects actual 2027 Medicare drug spending for the selected drugs.
METHODS: Of the 25 selected drugs, three first-round drugs were deselected by statute for 2027 following generic or biosimilar entry. For the remaining 22 drugs, we estimated 2027 Medicare drug spending by using net prices under a no-negotiation scenario and negotiated Maximum Fair Prices (MFPs) under the MDPNP, each applied to projected drug volumes. Volumes were projected by extrapolating 2022-2024 IQVIA NSP unit data to 2027 and calibrating them to the most recent Medicare Part D utilization data. Net prices were extrapolated from 2021-2022 benchmarks. Spending estimates also accounted for expected generic or biosimilar entry.
RESULTS: Projected 2027 Medicare spending for the 22 drugs was $55.9 billion without negotiation and $44.3 billion with negotiation, representing an estimated $11.6 billion reduction (20.7%). Of this reduction, $1.8 billion was attributable to the first-round drugs in their second year of negotiated pricing and $9.8 billion to the second-round drugs in their first year, which was below CMS’s $12 billion estimate. While drugs with high pre-negotiation rebates showed large reductions overall, a greater relative reduction was observed for older drugs with low pre-negotiation rebates, such as Xifaxan.
CONCLUSIONS: The MDPNP will effectively reduce Medicare drug spending by $11.6 billion in 2027. Savings varied by drug characteristics, with relative reductions for older low-rebate drugs and absolute savings for high-spending drugs.