Pharmaceutical companies around the world are gearing up to bring about a major shift in how their biggest customers do business. On September 1, Medicare will cover the first 10 drugs. historic price negotiations. This remedy is undoubtedly one of the most expensive in the country, probably includes Common treatments for cancer and diabetes.
This negotiation could save the federal government nearly $100 billion by 2031, and slash Some of the prices Medicare pays are half off.They are also the subject multiple lawsuits Manufactured by major pharmaceutical companies such as Merck and Johnson & Johnson.
The ability to negotiate prices directly with pharmaceutical companies is unprecedented in Medicare’s 58-year history. To exercise that power, governments need to grapple with the difficult question of what makes drug prices fair.
Whatever approach government agencies take to answer this question could have significant ramifications for both the affordability and availability of prescription drugs, now and for decades to come.
Medicare can push back and inform drug companies of their priorities
While this unprecedented bargaining process will result in some tough decisions for Medicare, experts said the need to continue finding better treatments for horrific illnesses is the biggest challenge.
“The chronic tension between ensuring healthcare remains affordable and rewarding good clinical innovation is a major trade-off across this enterprise,” he said. Steve Pearsonfounder and president of the Clinical Economics Review Institute.
Medicare is willing to bring it down roughly, $150 a billion Spending every year on medication helps almost everyone. 1 in 4 older Americans For those struggling to afford prescriptions, officials also recognize that profits from these products will help potential future blockbusters. “Eventually,” the Medicare director said. Meena Seshamani“The goal of the negotiations is to improve the affordability of treatments people need and to encourage innovation.”
By lowering the price of certain medicines below others, Medicare allows the industry to focus on the types of key innovations the agency focuses on, such as medicines that address unmet needs or attack diseases in new ways. get the chance to let us know. Some other countries include government health agencies. England and Francehas long paid less to companies for counterfeit drugs that offer less clinical improvement than existing treatments.
The private companies that manage the Medicare prescription drug program are already in trouble, some discounts Bargaining power from pharmaceutical companies is limited and their incentives do not always align with government incentives.
With this new authority, Medicare can begin to push back more forcefully and directly against some of the prices it deems unreasonably high.
“This negotiating process has really turned the tables,” he said. Ben Romea physician at Brigham and Women’s Hospital and a researcher at Harvard Medical School.
Are there alternative medicines and how much do they cost?
The first stage of the process addresses this central question. How much more or less is the value of the drug under negotiation compared to other available treatments for the same condition?
To make these comparisons, the government has assembled a team of dozens of experts, including pharmacists, economists and data scientists. Among those leaders is Daniel Haider, who recently joined the Center for Medicare and Medicaid Services from a senior position at one of the pharmaceutical companies, Bristol-Myers Squibb. file a lawsuit to stop negotiations.
First, the team needs to determine what drugs can be rigorously compared. “In some cases, it will be very easy,” Roma said. “But in many cases, Medicare will struggle with how broadly or narrowly to define alternative therapies.”
Take Eliquis, for example, many experts expect the $561 monthly drug to prevent and treat unwanted blood clots to be among the first 10 drugs to be negotiated. . Eliquis is usually prescribed to people who have a common heart condition called atrial fibrillation or who have blood clots in deep veins.
There are three expensive competitors in this therapy with similar mechanisms, well over $100 per month. His fourth, much older treatment, known as warfarin, costs less than $10 a month.
Clinical data suggest that Eliquis is often more effective than warfarin in stroke prevention, has fewer side effects, and is more convenient for patients.some major medical associations discourage Doctors refrain from using warfarin in certain patients. All of this raises the question of whether it should be included in Medicare’s analysis if it targets Eliquis for negotiation.
Rome et al. argue that drugs such as warfarin can provide a useful baseline. “If old replacements are available, [Medicare] It’s absolutely necessary to compare it with new drugs to see how well the new product actually works,” Roma said.
In 2021, Medicare and Eliquis paid On average, the dose per dose was 42 times higher than for warfarin (not including confidential discounts provided by pharmaceutical companies).
Warfarin’s lower price could theoretically provide more cover when Medicare demands a steep discount on Eliquis.risk, pharma executive WarningIf government prices fall too low, the industry’s future ambition to develop safer and better versions of old treatments could be dampened.
Other countries have a recipe for price negotiation, but Medicare has devised its own
In addition to collecting clinical data, Medicare will also need to consider several other factors that Congress outlined in the Control Inflation Act, such as the cost of producing drugs and how much profit manufacturers made from federally funded research. There is
Anton AvansegnaHealth policy researchers at the University of Texas are looking at less obvious but important societal factors, such as how certain drugs affect people’s well-being, like treatment for depression and other psychological problems. should be considered by the authorities, he said.
“We know these are things that patients hold dear and need to be considered in tandem with health implications,” said Avansenha.Medicare is Said It will hold patient-focused hearing sessions to reflect public-shared concerns in its drug pricing analysis.
Agencies then have to narrow down the mountain of evidence to come up with a single price: the initial offer at the negotiating table.
Most other countries that have engaged in similar bargaining work over the years have relied on relatively formulaic and often quantitative processes to assess the value of medicines relative to their therapeutic benefits. . So far, Medicare refuses to borrow much from other countries’ more rigid cookbooks.
ICER’s Steve Pearson said, “What Medicare originally put forward is a bit like taking a pinch of this and a pinch of that and throwing it in a blender.”
The agency will take a more qualitative approach, but said it could vary by drug. “We need to maintain the flexibility to consider the nuances between different drugs,” said Medicare’s Seshamani. trade off. “We absolutely plan to use data and analytics as part of our process. .”
Pearson agreed with Seshamani that flexibility is important for Medicare, especially in the early negotiations, but the pharmaceutical companies say this approach is more vulnerable to political change and the industry as a whole. He warned that it could lead to instability.
“Investing in these drugs is risky,” he said. Lauren Neves, Vice President of PhRMA, a sector industry group. “Companies need to be able to predict how much the government will pay for these drugs.” PhRMA jointly filed: lawsuit In June, it argued that Medicare’s new powers were unconstitutional.
A more reproducible negotiation process could benefit not only private health plans, but also the patients they cover, said Ben Roma. struggle Because I can afford a prescription.
Lack of trust on both sides threatens to derail negotiations
Industry watchers are uncertain whether either side will engage in good faith negotiations after Medicare makes its initial price offer. Pharmaceutical companies have only one chance to formally refute.
Some policy experts worry that companies will legally compete with the highest price possible, regardless of whether the data justifies the higher price.
Some worry that Medicare will be forced into a price bottom race, especially since the first negotiations will take place in 2024, the election year. It could be politically advantageous to take a tough stance on the pharmaceutical industry at this time.
A health economist at the University of Southern California said, “What worries me is the all-out attack on prices.” Darius Camelwalla. “There will definitely be medicines that have unproven value and need to be heavily discounted, but the nuance is very important.”
Steve Pearson said Americans could lose more than nearly $100 billion in promised savings if the negotiations go awry because of legal threats and a lack of trust. They also offer a long-awaited opportunity to consider in a more public way the limits of the nation’s finite health care resources and the difficult choices that nations face in deciding how to spend those funds. would lose
“This process may not meet everyone’s expectations,” Pearson said, but it would “make these kinds of trade-offs more transparent, clearer, and more open to input from all the different participants.” It provides a unique opportunity to strike a balance.” It’s a step forward. “
This story is from the Health Policy Podcast trade offmedical coverage is supported in part by Arnold Ventures and West Health. Dan Gorenstein is Tradeoffs Editor-in-Chief and Leslie Walker is Senior Reporter and Producer. spectacle, show, playa version of this story first appeared.
