Health Affairs May 6, 2024
The Biden administration touts the Inflation Reduction Act (IRA) as lowering prescription drug costs and many of its supporters view having Medicare “negotiate” drug prices as emulating policies in Europe. The IRA does lower Medicare beneficiaries’ costs by capping their out-of-pocket spending on retail drugs in the Part D program; however, the IRA’s Medicare Drug Price Negotiation (MDPN) program is far more coercive than any European country system and unnecessarily threatens access to medicines for millions of Medicare and Medicaid beneficiaries.
Rather than a “negotiation,” the IRA’s MDPN program creates a government price-setting scheme under which the Centers for Medicare and Medicaid (CMS) will inform biopharmaceutical manufacturers of Medicare’s Maximum Fair Price (MFP). Should a company choose not to participate...
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