The first round of Medicare drug price negotiations has resulted in significant price reductions for ten commonly prescribed medications, though prices generally remain higher than those in other developed nations, according to new research published in JAMA.
Researchers led by Dr. Olivier J. Wouters from the London School of Economics and Political Science found that negotiated price reductions varied substantially across the selected drugs. The most dramatic decrease was observed for sitagliptin (Januvia), with a 42% reduction bringing the 30-day supply cost down from $195.60 to $113.00.
Price Reduction Analysis
The analysis revealed varying levels of success in price negotiations. Dapagliflozin (Farxiga) saw the smallest reduction at 8%, while three biologics - etanercept (Enbrel), ibrutinib (Imbruvica), and ustekinumab (Stelara) - achieved reductions between 33% and 40% from their estimated net prices.
The negotiated prices appear to reflect therapeutic value considerations. For instance, when comparing drugs within the same class, those with demonstrated additional therapeutic benefits maintained higher negotiated prices, suggesting a rational approach to pricing based on clinical benefit.
International Price Comparisons
Despite these reductions, the study revealed that U.S. prices remain substantially higher than those in six comparable high-income countries - Australia, Canada, France, Germany, Switzerland, and the United Kingdom. A striking example is ustekinumab, which, even after negotiations reduced its price from $7,859.99 to $4,695.00 per 30-day supply, remains significantly more expensive than in France ($1,219.92) and Germany ($2,503.99).
The sole exception to this pattern was insulin aspart, which achieved price parity with international markets following voluntary price reductions by its manufacturer.
Future Implications and Recommendations
Dr. Wouters suggests potential improvements to the negotiation framework, particularly regarding biologics. Currently, biologics are exempt from negotiations for 11 years post-FDA approval, compared to 7 years for small-molecule drugs. He argues this extended protection period lacks strong scientific justification and that earlier negotiation of biologic prices could generate additional savings for American taxpayers.
Looking ahead, Medicare is expected to target drugs with lower rebates in future negotiation rounds and may include Part B drugs in the third round. These changes could potentially lead to even larger percentage reductions, particularly for Part B medications.
Study Limitations
The researchers note important limitations in their analysis, including the lack of data on net prices in peer countries, suggesting that actual price differences between the U.S. and other nations may be even larger than observed. Additionally, the team had to rely on indirect methods to estimate pre-negotiation net prices due to data availability constraints.
