OBJECTIVES: To consider how US commercial payers will update their management of the first 10 drugs selected for Medicare price negotiation under the Inflation Reduction Act and understand how management might evolve with the continued implementation of price negotiations.

METHODS: Details regarding price negotiations were obtained from a review of public domain sources. Interviews with US payers representing a range of commercial organizations including national and regional Managed Care Organizations, Integrated Delivery Networks, and Pharmacy Benefit Managers were conducted to obtain input regarding anticipated impact on management of these drugs and to gain insights on evidence needs.

RESULTS: On August 29, 2023, CMS announced its first list of drugs that will be subject to price negotiation. The drugs include treatments for diabetes, heart failure, and cancer. They are among those with highest total spending in Medicare Part D and accounted for about 20% of total drug costs from June 2022 to May 2023. Negotiations will occur in 2024, with negotiated prices going into effect in 2026. The negotiation process will consider the selected drug’s clinical benefit, unmet need, impact on Medicare beneficiaries, and other considerations such as Research & Development costs. Though the focus is on Medicare, commercial payers agree that the negotiations will impact payer management and evidence development for these drugs and other similar drugs.

CONCLUSIONS: With Medicare negotiating lower drug prices, these savings may shift to commercial insurers, leading to higher member costs. This will likely result in stricter management by commercial payers and greater desire to manage costs through implementation of financial or outcomes-based contracts with manufacturers. Commercial payers will be closely following the Medicare price negotiations and will accordingly update management for the impacted drugs and other drugs covered in similar indications. This highlights the importance of proper evidence generation by manufacturers to ensure optimal coverage is maintained.