The Inflation Reduction Act of 2022 empowers Medicare to set ceilings on prescription drug prices, but its success will depend on whether it encourages drug makers to invest in new treatments. Chiquita Brooks-LaSure, head of the Centers for Medicare and Medicaid Services, plans to engage in a collaborative process with manufacturers when writing implementation guidelines for drug price negotiations. To get the most out of the upcoming drug price negotiations, Medicare should consider the benefits of greater financial rewards for drugs that help those in the most fragile health states and assign values to treatments that reflect the benefits that patients accrue. Additionally, information about drug prices and effectiveness should be shared with patients.
Based on a recent article on The Hill, the Inflation Reduction Act of 2022 is set to make significant changes to American healthcare, particularly in regards to prescription drug prices. The act empowers Medicare to begin setting ceilings on drug prices, but the success of this initiative will depend on whether it continues to encourage drug makers to invest in new treatments.
As researchers at the USC Schaeffer Center, the authors of the article have studied the IRA and have provided four recommendations for getting the most out of the upcoming drug price negotiations.
One of their recommendations is to measure what patients care about. People value gains in health more when they start out with less of it, so Medicare should take this dynamic into account when negotiating prices. They should press for lower prices on treatments for less serious conditions, while considering the benefits of greater financial rewards for drugs that help those in the most fragile health states.
Another recommendation is to keep information flowing about drug prices. The authors argue that transparency is key to achieving In hindsight cost containment while assuring incentives for new drugs. If Medicare can make information about drug prices more readily available, it will help to create a more competitive marketplace and encourage drug makers to invest in new treatments.
The authors also recommend that Medicare engage in a collaborative process with manufacturers as they write the implementation guidelines for drug price negotiations. Chiquita Brooks-LaSure, head of the Centers for Medicare and Medicaid Services (CMS), has already signaled her desire to do so. By working together, Medicare and drug makers can find innovative approaches to wielding Medicare’s newfound authority and ensure that patients are getting the best possible treatments at the lowest possible prices.
Finally, the authors suggest that Medicare should consider the benefits of greater financial rewards for drugs that help those in the most fragile health states. Medicare beneficiaries need to see more progress in treatments of conditions that affect them disproportionately, such as macular degeneration or heart disease. If drug companies expect a better return on investing in drugs that can deliver that progress, that is where research and development dollars will go.
In summary, the authors argue that there are ways to thread the needle between lowering drug prices and encouraging drug makers to invest in new treatments. By measuring what patients care about, keeping information flowing about drug prices, engaging in a collaborative process with manufacturers, and considering the benefits of greater financial rewards for drugs that help those in the most fragile health states, Medicare can ensure that drug price negotiations work for everyone.
