What is the reality of the introduction of international reference pricing for Medicare drug prices in the US?
High US pharmaceutical drug prices have been a major discussion topic for several years now, but recent proposals by the US administration to use drug prices in other countries to help Medicare negotiate with drug companies appear to be radical. What are the proposals and what do they mean for pharmaceutical manufacturers?
Medicare and the International Pricing Index Model
Put very simply, Medicare would use a new International Pricing Index (IPI) model that considers international reference prices to negotiate drug prices with manufacturers.
Under the current proposals, the Centres for Medicare and Medicaid Services (CMS) would be able to undertake a five-year experiment with Medicare drug prices. The experiment would only consider Medicare Part B drugs, which account for ~29% of US prescription drug spending, excluding Medicare Part D drugs.
In the proposed experiment, the US would be split into two geographical regions, with 50% negotiating Part B prices using existing methods, […]