Drug spending policies had been anticipated to be one of the largest off-sets in the reconciliation bill, however the magnitude of the included drug spending policies has been limited since initial discussions. Upon the release of the preliminary outline of the prescription drug pricing provisions that were to be included in the final bill, CIDSA experts were asked to analyze how the outline of Medicare negotiation would impact prices. While the full text has been released in the time since this survey began, experts were asked to limit their analysis to the initial outline.
In the preliminary drug pricing provisions, negotiation was outlined for both Medicare Part B and Medicare Part D. Drug eligible for negotiation must be among the highest gross spending drugs and are single source drugs outside of their initial exclusivity period, 9 years for small molecule drugs and 12 years for biologics. The proposal outlines a timeline where the Secretary of HHS will negotiate up to 10 drugs in 2025 and each proceeding year will select more eligible drugs to negotiate, until reaching 20 drugs by 2028. The negotiated drug must also not exceed certain outlined benchmarks, which are as follows:
The outline also notes that manufacturers who refuse to participate in negotiation will be subject to an excise tax. There are also additional exemptions included to protect small biotech firms.
The CIDSA experts agreed that the preliminary overview of Medicare negotiation as in the reconciliation bill will moderately reduce drug spending. While the experts unanimously agreed that this policy would moderately decrease net prices; they were evenly split if list prices would be affected or moderately decrease. The panel believe that this policy would moderately increase drug access for Medicare patients and large patient groups but would have no impact on any other patient group.
All of the experts opined that this policy would advance drug spending policy but were spilt on if it would be a significant advancement or less. The experts agreed that the ability to be implemented and the precedent-setting value of the policy should be considered strengths. The experts were split on whether the magnitude of the impact on drug spending and the size of the affected patient population were strengths or weaknesses of the policy.
Only 8 experts were able to participate in this survey.
The expert panel highlighted several policy concerns for policymakers to consider. Most notably, the experts highlighted that, with a few exceptions, it is hard for a drug to become a top-spend drug in Medicare right after its launch. The possible implications this policy could have on industry investment was also a notable consideration that experts highlighted. Other key considerations are that the negotiated price must be publicly available and that in the policy is it unclear if “drugs” are defined as a new molecular entity or a new drug application. Policymakers should also consider the ability for manufacturers to shift customers to a different product that is not subject to negotiation and that the AMP calculations must be reflective of actual net prices paid across non-federal markets. The final points that experts made for policymakers to be aware of were the uncertainty of the behavioral response of manufacturers to manipulate launch prices and the uncertainty of how many drugs would fall under this policy today.