Medicare Drug Price Negotiation leads to 38% to 79% price decrease – Healthcare Economist

Medicare drug price negotiation is here. Medicare’s maximum fair prices (MFPs) result in discounts of between 38% and 79%. In fact, the actual discounts are higher, as the figures in the table below are discounts off 2023 prices (rather than 2024 prices).

How did the negotiation process work? CMS Fact Sheet He described the process as follows:

CMS held three meetings with each of the participating pharmaceutical companies to discuss offers and counteroffers, analyze the evidence, and attempt to arrive at a mutually acceptable price for the drug. During the negotiation process, CMS revised its offers for each of the drugs upward in response to these discussions. Many pharmaceutical companies also revised their counteroffers for their drugs downward, based on discussions with CMS. For five of the selected drugs, this process of exchanging revised offers and counteroffers resulted in CMS and the pharmaceutical company reaching agreement on a negotiated price for the drug in conjunction with a negotiation meeting. In four of these cases, CMS accepted a revised counteroffer proposed by the pharmaceutical company. For the remaining five selected drugs, CMS sent a final written offer to those pharmaceutical companies, in accordance with the process outlined in its guidance, and in each case, the pharmaceutical company accepted CMS’s offer by the regulatory deadline.

But how exactly did the CMS arrive at these prices? It is unclear. In fact, the CMS said it will not make public an explanation of the agreed negotiated prices until March 2025.

Further details on the MFF negotiation timeline are provided below.

What information and sources were used to prepare the MFF? Relevant information included:

…manufacturer=submitted data on research and development costs, prior federal financial support, unit costs of production and distribution, market/revenue/sales data, and information on patents, FDA exclusivities, and FDA applications and approvals. For the factors listed in section 1194(e)(2) related to evidence on alternative treatments (including therapeutic advances, prescribing information, comparative effectiveness, and unmet medical need), CMS considered information from a wide variety of sources, including: information submitted by participating pharmaceutical companies, individuals with Medicare, academic experts, physicians, caregivers, and other stakeholders…; information provided at Patient-Centered Listening Sessions…; information shared by participating pharmaceutical companies during meetings with CMS; and information CMS identified from its own literature searches, including clinical guidelines and published studies.

Negotiated prices will take effect on January 1, 2026.