Has the Centers for Medicare Medicaid Services Implicitly Adopted a Value Framework for Medicare Drug Price Negotiations? [Editor's Choice]


The US Inflation Reduction Act (IRA) of 2022 created several major policy changes to the pricing of prescription drugs under Medicare.1Arguably, the most significant reform requires the Centers for Medicare & Medicaid Services (CMS) to directly negotiate prescription drug prices with the pharmaceutical industry for top-spending Medicare Part B and D drugs.2 

Implementation of the Medicare prescription drug price negotiation program necessitates that CMS establish procedures and ground rules. The agency released its revised guidance for program implementation on June 30, 2023.3 The guidance informs regulated parties and the public about the complex implementation details, evidence requirements, and specific processes for Medicare price negotiation. The guidance clarified many, but not all, uncertainties related to the selection of drugs subject to negotiation, the procedure for establishing an initial price offer, the offer-counteroffer process, and the public listing of the final Medicare Fair Price.

In this commentary, we show the first 10 drugs selected by CMS. We then describe the process and evidence considered in establishing the initial price offer and discuss what we believe to be the inherent value framework underlying
the initial price offer and its implications for evidence generation. We further explain the process by which CMS will identify therapeutic alternatives and integrate comparative clinical benefit and net prices to arrive at the initial price offer. We argue that the approach to determine the initial price offer will follow a generalized value assessment framework akin to the approach of many ex-US health technology assessment bodies.4


Sean D. Sullivan Inmaculada Hernandez Scott D. Ramsey Peter J. Neumann

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