What we don't know about the new Medicare drug prices

For many of us, Thursday was a feast for health policy experts. The Centers for Medicare & Medicaid Services released the Maximum Fair Prices (MFPs) for the first ten drugs being negotiated under the Inflation Reduction Act. This is an important moment in prescription drug pricing policy. For the first time, CMS has had the opportunity to analyze current clinical evidence, unmet need, and other related considerations when negotiating the prices of these ten drugs. And for the first time, we have transparency into the true net prices paid by the largest single drug purchasers in the United States. Most importantly, this is a milestone in CMS's efforts to provide seniors and taxpayers with savings on drugs that have no generic competition.

And what do prices actually tell us? Well, there's the CMS estimate of how much the Medicare program could have saved if MFPs had gone into effect in 2023 ($6 billion), and the estimate of how much retirees will save out of pocket in 2026 just from the lower prices ($1.5 billion).

More difficult, however, is understanding discounts on list prices that range from 38% for Imbruvica for blood cancer to 79% for Januvia for diabetes. Those of us who work with drug pricing on a daily basis closely examine and evaluate the methods used to set those prices. Of the many factors cited in the legislation, which ones most influenced CMS's setting of initial price offers? How did manufacturers use the data they had to provide to prove the value of their drugs? The short answer: We don't know. At least not yet.