Health Affairs November 28, 2023
Under the Inflation Reduction Act (IRA) of 2022, the Centers for Medicare and Medicaid Services (CMS) will begin negotiating drug prices for a subset of drugs in Medicare. In doing so, CMS must determine how to price each drug according to its benefits. In the language of the IRA, this is “the extent to which such drug represents a therapeutic advance as compared to existing therapeutic alternatives and the costs of such existing therapeutic alternatives.”
Yet translating a drug’s relative costs and benefits into a “fair price” carries some inherent subjectivity. With no single right answer, we describe the varied approaches of three high-income countries: Canada, France, and Germany. We then discuss considerations for CMS as it forges a historic...
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