Stepping into the implementation phase of the Inflation Reduction Act (IRA) brings us face-to-face with a transformative period in the American healthcare landscape. At the forefront is the IRA-provisioned Medicare Drug Price Negotiation Programme, aiming to lower healthcare costs by actively negotiating maximum fair prices (MFPs) for high gross expenditure drug products and biologics within the Medicare programme.¹ The focus is on single-source drugs (i.e. drugs without generic or biosimilar competitors) with combined expenditures exceeding $200 million under Medicare parts B and D^[a], approved for at least seven years for drug products and at least 11 years for biologics (see Table 1).²

The Center for Medicare & Medicaid Services (CMS) has outlined a framework in updated guidance for the programme implementation, from evaluating therapeutic alternatives to setting initial pricing, detailing negotiation processes, and specifying evidence requirements. Following the publication of the guidance, in August 2023 the CMS identified the first 10 Medicare Part D drugs for negotiation, with the aim of implementing MFPs in 2026. The next set of drugs for negotiation will be announced in February 2024. In this context, real-world evidence (RWE) could represent a valuable source of data for manufacturers in the preparation of their dossiers and could help demonstrating the value of their drug to patients.³

Table 1. Eligibility criteria for drug products and biologics eligible for the Medicare Drug Price Negotiation Programme

The importance of RWE in the negotiation process

To evaluate the clinical benefit of a drug and negotiate MFPs, the CMS will consider a broad range of evidence, including clinical data, existing literature, internal analytics, input from subject matter and industry experts,and clinical experts’ opinion.⁴ In response to public feedback on the initial guidance, the CMS also acknowledged the crucial role of RWE in the Medicare Drug Price Negotiation process. ² RWE can be derived from the analysis of billing and insurance databases, product and disease registries,electronic health records and patient-generated data. High-quality RWE generated from these sources could help demonstrate the comparative effectiveness of a drug within everyday clinical practice and provide a value narrative across that product’s lifecycle,^{3, 5} thus impacting its negotiatedprice.^{2, 6-8} It could also provide information on sub-populations which may not have been represented within clinical trials, such as individuals with disabilities, older adults, individuals who are terminally ill and children, among others.

How will RWE inform the IRA’s Medicare Drug Price Negotiation process?

Figure 1 shows an overview of the negotiation process, highlighting key decision points where RWE could potentially be integrated to support the process.

Figure 1. Overview of the Process Taken by CMS in Establishing the Maximum Fair Price

The CMS will first identify therapeutic alternatives and evaluate the clinical advancement of the drug of interest compared to existing alternatives as well as the costs of these alternatives. The focus will be on generics and biosimilars (both on-label and off-label), particularly those within the same drug class. The CMS will also consider FDA-approved prescribing information, comparative effectiveness, and the addressing of unmet medical needs for specific populations.

As the CMS adjusts the initial pricing based on the clinical data gathered, RWE will also be considered in conjunction with peer-reviewed literature, clinical expert reports and patient experiences to provide a holistic picture of the drug's clinical benefit relative to its competitors, as well as its risks and side effects.^{2, 5, 6}

During the negotiation phase, if primary manufacturers reject the CMS's initial offer, they are encouraged to provide additional context and new data to support their counteroffers. Additionally, the CMS will conduct patient-focused listening sessions, inviting patients, beneficiaries, caregivers, and patient advocacy groups to provide feedback on therapeutic alternatives and other pertinent information.

Leveraging RWE for strategic decision-making

With the first MFPs being implemented in 2026, manufacturers would benefit from considering how to incorporate RWE to demonstrate their drugs’ value against alternative treatments.⁶ RWE generation, while time-intensive, is a valuable investment. It involves meticulous planning, data collection and analysis which can take several months or even years.⁵ Starting early before a drug is selected for negotiation is crucial to ensure the evidence produced is both robust and complete.⁵ Moreover, real-world data generated for this purpose could also be used in submissions to other health technology assessment bodies, which have already begun including RWE in price negotiations.⁶

RWE and Symmetron

At Symmetron, we have advanced methods experience that can be used to synthesise RWE and incorporate findings into strategic decisions and value messaging material. Our successful projects stand as a testament to our expertise in this field, and we are well-equipped to support manufacturers in navigating this new landscape, offering strategic guidance in the long-term planning and generation of RWE, ensuring they are well-prepared for future negotiations and assessments of both currently licensed drugs and those in development.

^[a] Medicare Part B generally pays for drugs that a person receives at a doctor's office, hospital, or infusion centre, whereas Medicare Part D pays for most at-home medications.

References

1.   Goldman D GJ, Lakdawalla D, Liden B, Shafrin J, Than K, Trish E. Mitigating the Inflation Reduction Act’s Adverse Impacts on the Prescription Drug Market: USC Leonard D. Schaeffer Center for Health Policy & Economics, 2023.
2.   Sofue T, Oguchi H, Yazawa M, et al. Serological and histopathological assessment of galactose-deficient immunoglobulin A1 deposition in kidney allografts: A multicenter prospective observational study. PLoS ONE 2023;18(2 February) (no pagination).
3.   Panalgo. Prepping for the Inflation Reduction Act: Why Manufacturers Need a Plan for Rapid RWE Generation. Volume 2023: Panalgo, 2023.
4.   CMS. Medicare Drug Price Negotiation Program: Revised Guidance, Implementation of Sections 1191 – 1198 of the Social Security Act for Initial Price Applicability Year 2026.  2023.
5.   E. BLF. Reassessing the Inflation Reduction Act with evidence in mind. Volume 2023, 2023.
6.   Magill C LS. The Inflation Reduction Act Puts Real-World Evidence Front and Center. Volume 2023, 2023.
7.   Chodankar D. Introduction to real-world evidence studies. Perspect Clin Res 2021;12:171-174.
8.   Schurman B. The framework for FDA's real-world evidence program. Applied clinical trials 2019;28.