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Prices for the first 10 drugs negotiated by Medicare fell from their initial net prices, but all drugs except one remained more expensive in the U.S. than in peer countries, researchers said.

Compared with their net prices prior to negotiation, negotiated prices for the 10 drugs ranged from 8% lower for dapagliflozin (Farxiga) to 42% lower for sitagliptin (Januvia), reported Olivier J. Wouters, PhD, of the London School of Economics and Political Science, and co-authors.

Specifically, the price of dapagliflozin dropped from $193.80 to $178.50 per 30-day supply, while the price of 30 days of sitagliptin fell from $195.60 to $113.00, they noted in a research letter published in . Both drugs are used for the treatment of type 2 diabetes.

Meanwhile, the negotiated prices for etanercept (Enbrel), ibrutinib (Imbruvica), and ustekinumab (Stelara) -- used in the treatment of rheumatoid arthritis, chronic lymphocytic leukemia, and inflammatory bowel disease, respectively -- tracked with "ceiling" prices, and were 33% to 40% lower than estimated net prices.

A key provision of the Inflation Reduction Act (IRA) of 2022 directed Medicare to negotiate the prices of certain top-selling drugs and to place upper limits or "ceilings" on negotiated prices. Medicare can then negotiate a lower price than the ceiling under certain circumstances, the authors noted.

In August, Medicare announced the negotiated prices -- which will apply to all Medicare Part D plans and are slated to take effect in 2026 -- for the first 10 drugs.

The purpose of this study was to evaluate Medicare's performance in the first round of drug negotiations by comparing negotiated prices to net prices before negotiation and to list prices in six other high-income countries -- Australia, Canada, France, Germany, Switzerland, and the U.K.

Asked why price reductions for the 10 negotiated drugs varied widely, Wouters told MedPage Today that he and his team had no "behind-the-scenes information" regarding the negotiation process but speculated that the range might exist for a few reasons.

For one thing, the ceiling for negotiated prices was based on either current prices negotiated by Part D plans or minimum discounted prices, whichever is lower, Wouters explained.

"Price reductions were generally larger for drugs where ceilings were based on minimum discounted prices," which included etanercept (33% reduction in price), ibrutinib (30%), and ustekinumab (40%), he pointed out.

Another factor is that Medicare was allowed to negotiate prices below the ceiling price after comparing the drug's price and clinical benefit to therapeutic alternatives.

"The negotiations included two pairs of drugs that belonged to the same drug class -- Eliquis [apixaban]/Xarelto [rivaroxaban] and Farxiga [dapagliflozin]/Jardiance [empagliflozin]. In each case, the drug with added therapeutic value ended up with a higher negotiated price. This suggests that negotiations have better aligned drug prices with therapeutic value," Wouters said.

Outside of the price for insulin aspart (Novolog, among others), which was this year by its manufacturer, all product prices were higher than in the six other high-income countries.

As an example, the negotiated price for ustekinumab was $4,695.00 for a 30-day supply (down from an initial net price of $7,859.99), which is still higher than in France ($1,219.92) and Germany ($2,503.99).

Asked whether there were tweaks to the current negotiation program that could have created more savings, Wouters said the IRA exempts biologics from negotiation for 11 years following FDA approval, while small-molecule drugs are exempt for only 7 years post-approval, despite there being "little evidence" to support such extended protection.

"Congress could consider allowing Medicare to negotiate the prices of biologics earlier to create more savings for American taxpayers," he suggested.

Medicare is expected in future rounds to choose drugs with lower rebates than those in the first round, and may include Part B drugs in the third round of negotiations. Because of the way that the price ceilings were developed, if Part B drugs are selected, this may lead to larger price percentage reductions compared with the reductions for etanercept, ibrutinib, and ustekinumab in the first round, Wouters noted.

For that reason, he stressed the importance of continuing to assess the outcomes of future rounds of negotiation, particularly if different types of products are chosen.

One limitation to the study was the lack of data on net prices in peer countries, which could mean that "true differences" between the U.S. and peer countries were "likely larger than we observed," Wouters suggested. Another limitation was the authors' reliance on an indirect approach to estimating net prices prior to negotiation due to a lack of available data.

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