Medicare drug price negotiations

SEPTEMBER 16, 2024

Assessing the implications of Medicare drug price negotiations for drug development sponsors

Home/ About Us/ Blog/ Medicare drug price negotiations

Copy and paste this URL:

https://www.fortrea.com/about-us/blog/medicare-drug-price-negotiations.html

Medicare drug price negotiations

The Centers for Medicare and Medicaid Services' (CMS's) recent announcement of the first Medicare-negotiated drug prices marks a significant milestone for the Inflation Reduction Act of 2022 (IRA), which includes several provisions that impact the U.S. healthcare system.

Understanding the impact of Medicare price negotiations

Regardless of whether a drug has been commercialized or is still in development, manufacturers will need to consider the implications of Medicare drug price negotiations. The implications will be more straightforward for drugs that have been on the market for several years, as these products could face an imminent risk of being selected for price negotiation.

But even for drugs that are early in the development process, the impact of Medicare drug price negotiations will still be significant, because the future economic outlook for a drug will vary depending on whether it will be competing with drugs that have been selected for negotiations. This, in turn, could affect drug development decisions such as which indications to pursue and in what sequence. In addition, it will be important for all manufacturers to understand the different exclusions from drug price negotiations and determine whether one or more of the exclusions might apply to their products.

Incorporating price negotiations into product planning

To help drug development sponsors understand how the IRA may affect drug development decisions and how to make informed decisions, John Carlsen, MHA, Vice President, Reimbursement Strategy & Payer Insights, Market Access Consulting & HEOR, recently explained:

• How drugs are selected for Medicare drug price negotiation
• The timeline of Medicare drug price negotiations
• Which drugs are excluded from price negotiation
• How CMS determines the price offered to manufacturers
• How data can help sponsors navigate uncertainty

For more on Fortrea's market access consulting and health economics and outcomes research (HEOR), visit https://www.fortrea.com/solutions/fortrea-consulting-services/market-access-consulting-and-heor.html