A DESCRIPTIVE COMPARISON OF U.S. MEDICARE IRA NEGOTIATED PRICES AND AVERAGE MFN BENCHMARKS FOR PART D DRUGS
Author(s)
Chad Patel, PharmD1, Neha Pethad, PharmD2, Paige Ngo, PharmD3;
1AESARA, Head US Strategic Partnerships, Chapel Hill, NC, USA, 2AESARA, London, United Kingdom, 3AESARA, Chantilly, VA, USA
1AESARA, Head US Strategic Partnerships, Chapel Hill, NC, USA, 2AESARA, London, United Kingdom, 3AESARA, Chantilly, VA, USA
OBJECTIVES: The Inflation Reduction Act (IRA) and Most Favored Nation (MFN) pricing approaches aim to reduce U.S. drug prices using different policy mechanisms. This study descriptively compared IRA negotiated maximum fair prices (MFPs) for the initial price applicability year 2027 with MFN benchmark prices for the same U.S. Medicare Part D drugs to characterize differences in price levels across therapeutic classes, including oncology, diabetes, and chronic obstructive pulmonary disease.
METHODS: A descriptive policy analysis was conducted using publicly available data. Published IRA MFPs effective in 2027 were identified for the 15 U.S. Medicare Part D drugs subject to IRA negotiation. MFN benchmark prices were constructed using an international reference pricing approach aligned with proposed CMS MFN frameworks, defined as the average publicly available international reference price across a predefined basket of OECD reference countries. Prices were standardized to comparable formulation and strength-level units where feasible. Absolute and relative price differences between MFPs and MFN benchmarks were descriptively summarized. CMS Medicare Part D gross spending data were used to contextualize observed price differences.
RESULTS: Across the 14 drugs with available international reference pricing, MFN benchmark prices varied substantially relative to negotiated MFPs. Absolute differences ranged from −$2,632 to $5,195 per formulation- and strength-level unit, while relative differences ranged from −41% to 654%. On average, negotiated MFPs exceeded average international reference prices, with a mean absolute difference of $957 per formulation and strength-level unit and a mean relative difference of 167%. Price differences varied across therapeutic classes, with some categories exhibiting narrow price alignment and others showing wider dispersion.
CONCLUSIONS: Observed differences between IRA negotiated prices and MFN benchmark prices varied widely in magnitude and direction across U.S. Medicare Part D drugs, suggesting that alternative federal pricing approaches may generate different price signals across therapeutic classes.
METHODS: A descriptive policy analysis was conducted using publicly available data. Published IRA MFPs effective in 2027 were identified for the 15 U.S. Medicare Part D drugs subject to IRA negotiation. MFN benchmark prices were constructed using an international reference pricing approach aligned with proposed CMS MFN frameworks, defined as the average publicly available international reference price across a predefined basket of OECD reference countries. Prices were standardized to comparable formulation and strength-level units where feasible. Absolute and relative price differences between MFPs and MFN benchmarks were descriptively summarized. CMS Medicare Part D gross spending data were used to contextualize observed price differences.
RESULTS: Across the 14 drugs with available international reference pricing, MFN benchmark prices varied substantially relative to negotiated MFPs. Absolute differences ranged from −$2,632 to $5,195 per formulation- and strength-level unit, while relative differences ranged from −41% to 654%. On average, negotiated MFPs exceeded average international reference prices, with a mean absolute difference of $957 per formulation and strength-level unit and a mean relative difference of 167%. Price differences varied across therapeutic classes, with some categories exhibiting narrow price alignment and others showing wider dispersion.
CONCLUSIONS: Observed differences between IRA negotiated prices and MFN benchmark prices varied widely in magnitude and direction across U.S. Medicare Part D drugs, suggesting that alternative federal pricing approaches may generate different price signals across therapeutic classes.
Conference/Value in Health Info
2026-05, ISPOR 2026, Philadelphia, PA, USA
Value in Health, Volume 29, Issue S6
Code
HPR2
Topic
Health Policy & Regulatory
Topic Subcategory
Insurance Systems & National Health Care, Pricing Policy & Schemes
Disease
SDC: Diabetes/Endocrine/Metabolic Disorders (including obesity), SDC: Oncology, SDC: Respiratory-Related Disorders (Allergy, Asthma, Smoking, Other Respiratory)