The Health Policy War Room

The Inflation Reduction Act (IRA) of 2022 instructed the Centers for Medicare and Medicaid Services (CMS) to initiate drug price negotiations with manufacturers for the first time. A key component of these negotiations involves considering factors like the drug's benefits and costs to establish a "lowest maximum fair price." (MFP) For drug manufacturers, CMS’s process for making comparisons of therapeutic alternative(s) to determine the MFP raises a number of crucial questions. The IRA's guidance suggests that CMS will initially compare drugs within the same class as the negotiated drug to determine a starting point for pricing. For drug manufacturers, this approach raises concerns regarding price competition within drug classes. As new drugs are often priced in line with preexisting brand-name drugs in the same class, the negotiation process may result in downward pressure on prices for all drugs in the class. This could significantly affect the revenue and profitabi

I just finished reading Anna Kaltenboeck’s article in Health Affairs titled “CMS Threads the needle on a Tricky Question: What is a Drug?"  Kaltenboeck raises a number of potentially thorny issues that, if not addressed fully, could have negative implications on CMS’s drug price negotiation process. I was at CMS in the early 2000’s and was involved in maturing the Average Sales Price (ASP) program under Part B. We spent several years drafting, reviewing, re-drafting and proposing and re-re-drafting policies that were aimed at filling in the blanks in the ASP system. We took a thoughtful and meticulous approach to questions such as “How should a lagged discount be reflected in ASP?”, “What is a bona-fide service fee?”, and “How should ASP reflect ‘intentional overfill’?” Here are three things that I took away from Kaltenboeck’s article: 1. Rapid Implementation Brings Seen and Unforseen Challenges: The Inflation Reduction Act (IRA) requires the Centers for Medicare and Medicaid S

 I ntroduction: As long time readers know, Medicare periodically reviews its national coverage policies for medical services. This includes the consideration of National Coverage Determinations (NCDs) regarding whether specific items or services should be covered nationally. One such NCD pertains to PET beta amyloid imaging for dementia and neurodegenerative disease. Background: In 2013, Medicare established the NCD for PET beta amyloid scans as a part of Coverage with Evidence Development (CED) studies. The current NCD allows for coverage of a single PET beta amyloid scan when provided through a clinical trial that has been reviewed and approved by CMS. All other use cases are non-covered. There has been considerable stakeholder criticism that the NCD was overly restrictive and impacted Medicare beneficiary's ability to access care. However, with advances in medical care, standards of practice, and the development of promising anti-amyloid treatments, the application of amyloid PE