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PhRMA Foundation Selects Three Papers Exploring Challenges in Medicare Drug Price Negotiation for $25K Awards

December 13, 2023

The Journal of Managed Care & Specialty Pharmacy (JMCP) will publish the papers in special issue on Inflation Reduction Act implementation challenges.

The PhRMA Foundation awarded $25,000 Challenge Awards to the authors of three manuscripts that explore crucial challenges facing the Centers for Medicare & Medicaid Services (CMS) in implementing Medicare drug price negotiation.

The Inflation Reduction Act authorizes Medicare to negotiate the prices of top-selling drugs with manufacturers. Although CMS released revised guidance in June on how it would implement this program, many questions remain around the execution of this long and complex process. The PhRMA Foundation partnered with the Journal of Managed Care & Specialty Pharmacy (JMCP) on a call for papers investigating unanswered questions about the process.

The three winning manuscripts are available online ahead of print in JMCP:

As CMS moves forward with implementation of Medicare drug price negotiation, many details regarding the process remain unclear. We wanted to tap into the knowledge and expertise of the research community to provide CMS with considerations for addressing some of these challenges in ways that are scientifically rigorous, transparent, and most importantly, patient centered.

Amy M. Miller, PhD PhRMA Foundation President

Two of the papers address challenges that CMS faces in selecting therapeutic alternatives for the first 10 drugs subject to Medicare negotiation. To calculate a maximum fair price, CMS will consider evidence comparing the effectiveness of the drug to that of therapeutic alternatives.

In the Hernandez paper, the authors engage in an exercise mimicking the potential process that CMS may use to identify therapeutic alternatives. The authors use Medicare claims data and clinical guidelines to propose relevant therapeutic alternatives for the initial 10 drugs up for negotiation and then describe the challenges that CMS may face in this process.

“Decisions about what constitutes a therapeutic alternative(s) and to what extent the alternative must be clinically comparable remains uncertain. These seemingly straightforward decisions will have a major impact on the determination of the initial price offer,” the authors write. “As CMS will not publish the list of therapeutic alternatives used in the negotiation process, analysts and policymakers will have to rely on exercises like this to predict the impact of the negotiation process, evaluate its implementation, and identify opportunities for improvement.”

The Mooney paper also tackles the issue of selecting therapeutic alternatives. The authors use clinical guidelines to identify potential therapeutic alternatives for etanercept, a drug used to manage and treat autoimmune conditions that is one of the first 10 drugs up for Medicare negotiation. Across the drug’s five indications, they identify 22 potential therapeutic alternatives.

“We faced several challenges in selecting therapeutic alternatives using clinical guidelines, such as how to reconcile strong recommendations that were based on weak evidence and how to consider combination therapies,” the authors write. “This exercise demonstrates the complex considerations that CMS will face as it negotiates drug prices based on therapies’ cost, safety, and effectiveness relative to therapeutic alternatives.”

The third paper addresses the issue of patient engagement in the CMS process. When evaluating evidence on the benefits of a drug as compared to therapeutic alternatives, CMS should engage in patient-centered approaches. The Poudel paper states, “there is a need for a patient-centric, clear, transparent, and rigorous framework to harmonize various sources of evidence.”

The authors propose a four-step process to implement a patient-centered evidence inventory to systematically evaluate treatment benefits, including re-evaluating evidence as new information become available. “The involvement of patients in the evidence evaluation process ensures that patients’ perspectives and needs are considered, resulting in more patient-centered decision-making,” the authors wrote.

These papers will be part of a special print issue of JMCP, along with other accepted submissions to the competition.