Preparing for Medicare Drug Price Negotiation with Real-World Evidence

As the US government takes an active role in negotiating drug pricing, early preparation for context-specific review has become critical for manufacturers.

The US Congress enacted the Medicare Drug Price Negotiation Program (MDPNP) of the Inflation Reduction Act (IRA) in response to concerns about the rising cost of drugs.

Since its launch, the MDPNP has started a structural shift in the US drug pricing landscape. With negotiated prices for the MDPNP’s initial set of 10 drugs taking effect in 2026, additional drugs will be selected across subsequent, ongoing rounds, including 15 more whose negotiated prices will go into effect in 2028.

Additionally, implementation of the 2028 Initial Price Applicability Year (IPAY) is marked by an expansion of the category of drugs that the MDPNP selects, as the program will include Medicare Part B drugs for the first time that year.

On an ongoing basis, additional drugs will be selected for future rounds of negotiation. Following the selection of their medications by the Centers for Medicare and Medicaid Services (CMS), drug manufacturers must engage directly with CMS in response to formal requests for treatment, utilization, and revenue data.

In this context, real-world evidence (RWE) can serve as a critical input, helping to characterize cm, unmet need, and comparative effectiveness of a selected drug, in concert with data available from clinical trials. However, the effective use of RWE in this setting is often nuanced, requiring careful consideration of study design, data sources, and alignment with CMS’s evaluation criteria. For manufacturers, understanding CMS’s MDPNP drug selection process is essential, and early preparation for selection and negotiation – including when and how to leverage RWE during that process – can be critical.

What is CMS’s drug selection and negotiation process?

CMS’s drug selection criteria include total Medicare spend [the program is intended to include drugs associated with the highest Medicare spend] whether an approved generic or biosimilar exists in competition with the drug, and the time that has passed since its approval

Once selected, CMS determines a Maximum Fair Price (MFP) for drugs based on its own assessment and evidence submitted by drug developers through Information Collection Request (ICR) forms. CMS and manufacturers then engage in a negotiation process, during which manufacturers may respond to the initial offer with counterproposals supported by additional evidence. Preparing responses to questions on ICR forms or for negotiation with CMS could require access to robust data that may not be readily available via clinical trials alone.

What can drugmakers negotiate if their drug is selected into the MDPNP?

In short, an MFP is meant to reflect all (or at least the majority) of the available discounts off the list price of a selected drug to establish a Medicare-specific ceiling price, while considering regulatory constraints and the negotiation process between CMS and a given manufacturer.

Once an MFP is determined, CMS and the manufacturer of a drug may negotiate that price. Both parties present and evaluate evidence to justify their positions, including data on clinical benefits and comparative effectiveness. Other considerations may include patient access, drug utilization, and market factors.

What types of evidence may be most effective in supporting an ICR Response?

Effective responses deliver key messages with data-driven evidence about the value of a drug, especially as compared to available alternatives. Respondents evaluate a drug’s MFP through multiple proposed elements of value, such as a drug’s clinical benefit versus therapeutic alternatives, support of unmet needs or reduction in disease burden, utilization and revenue data, and investments into research and development. 

This kind of evidence can reinforce value propositions in ICR responses, such as information on treatment patterns and utilization of a given therapy among Medicare-eligible patients. Other dimensions of a drug’s value proposition could also be considered, including RWE on the efficacy, safety, health care resource use, and cost data associated with it.  

How can manufacturers effectively develop the evidence that they need to prepare for possible MDPNP drug selection?

Timeliness is important in any response: RWE on any factor must be generated early enough to shape the development of key messages around the value of a drug. Manufacturers should take care to begin gathering evidence early and plan to integrate RWE alongside clinical trial data to better position the value of their drug in Medicare-relevant settings.

Doing this means ensuring that RWE is fit-for-purpose, with study designs and analytic approaches tailored to support clear and credible messaging. Engaging with a partner familiar with the time and care that it takes to generate such evidence can help support both ICR responses and post-ICR submission activities, including negotiation.

Taiji Wang, Manager
Dominic Pilon, Vice President
Masha Zhdanava, Vice President
Dave Nellesen, Principal 
Patrick Lefebvre, Managing Principal 
Keith Betts, Managing Principal