Medicare Drug Price Negotiations to Move Forward

Now that a U.S. judge has rejected pharmaceutical companies’ arguments against Medicare price negotiations, all companies have indicated that they intend to participate in the program.

“Our goal is to ensure access to innovative treatments and therapies for people that need them when they need them. Medicare will negotiate in good faith consistent with the requirements of the law on behalf of people with Medicare,” Chiquita Brooks-LaSure, administrator of the Center for Medicare and Medicaid Services, said in a press release.

CMS released the list in August 2023 of the first 10 drugs to be negotiated under the Inflation Reduction Act. The legislation, signed by President Joe R. Biden in August 2022, allows CMS to negotiate prices for drugs covered by Medicare Part D that do not have a generic or biosimilar available.

The 10 drugs selected accounted for $50.5 billion in total Part D gross covered prescription drug costs, or about 20%, of total Part D gross covered prescription drug costs between June 1, 2022, and May 31, 2023. Medicare beneficiaries paid $3.4 billion in out-of-pocket costs for these drugs.

The pharma companies with chosen products and the public had until Oct. 2, 2023, to submit data and information to CMS. This fall, CMS will meet with companies to discuss their submissions. CMS may also hold a “listening” session with patients, caregivers, and patient organizations sometime between Oct. 30, 2023, and Nov. 15, 2023. CMS will then perform its own internal assessment of each drug and arrive at an initial offer price to present to drug makers by Feb. 1, 2024.

“A lot of people are eager to know more about how CMS will come up with their initial offer prices and evaluate the counteroffers they will receive from industry,” Steve Pearson, M.D., president of the Institute for Clinical and Economic Review (ICER) told Managed Healthcare Executive. “My hope is that CMS can accelerate their process for sharing publicly the rationale that they use for their price targets.”

ICER has weighed in on two of the 10 drugs selected for the first round of Medicare price negotiations: Bristol Myers Squibb’s Eliquis (apixaban) and Janssen’s Xarelto (rivaroxaban). Both treat patients with nonvalvular atrial fibrillation, a common type of irregular heartbeat. People with atrial fibrillation are five times more likely to have a stroke. Both are given to help prevent strokes

About 12.1 million people in the United States are expected to have atrial fibrillation by 2030, according to the CDC. Almost half of these patients have atrial fibrillation that is not caused by a heart valve problem, called nonvalvular atrial fibrillation.

Eliquis and Xarelto are atop Medicare Part D’s list of highest spending drugs. Between June 1, 2022, and May 31, 2023, Medicare’s Part D spending on Eliquis was $16.48 billion; Xarelto spending was $6.03 billion.

Steve Pearson, M.D.

“We wanted to choose a couple of drugs that were likely to make this first round of negotiations,” Pearson said. “Eliquis and Xarelto figured prominently among those drugs with high Medicare expenditure that were expected by many to be selected among the first group of drugs for price negotiation beginning later this year. We also factored in the advantage of being able to review two drugs having the same predominant indication with a single cost-effectiveness model.”

ICER compared Eliquis and Xarelto to warfarin and dabigatran, direct-acting oral anticoagulants that has been available as a generic beginning in 2022. Direct-acting oral anticoagulants improve outcomes in nonvalvular atrial fibrillation compared with warfarin.

The ICER analysis found that Eliquis and Xarelto both have significant advantages over warfarin and this supports a substantial price premium for Eliquis and Xarelto above warfarin. Comparing outcomes for Eliquis and Xarelto with dabigatran, however, the modeling suggests a smaller price premium for Eliquis and no price premium for Xarelto.

ICER’s modeling did not use quality-adjusted life year (QALY) as its framework assessment. For this review of Eliquis and Xarelto, ICER instead relied on the equal value life year (evLY), a measure that values all life-extending treatment effects equally for all patients, regardless of preexisting disability or age. The use of evLY was done in keeping with CMS guidance.

CMS has said the negotiation process will consider the selected drug’s clinical benefit, the extent to which it fulfills an unmet medical need, and its impact on people who rely on Medicare. Going forward, CMS will publish any agreed-upon negotiated prices for the selected drugs by Sept. 1, 2024; those prices will become effective starting Jan. 1, 2026.

This story first appeared on Managed Healthcare Executive.