Health Affairs December 2, 2024
The Centers for Medicare and Medicaid Services (CMS) recently announced the prices the agency negotiated for ten of the costliest drugs covered under Medicare Part D. The authority to negotiate drug prices was established in 2022 by the Inflation Reduction Act (IRA) as a policy response to the pharmaceutical industry (hereafter ‘industry’) having set prices that made the United States by far an outlier among wealthy countries in drug spending per capita.
Industry has offered three broad justifications for high prices: that they are required to recoup the costs of research and development (R&D); that hikes in prices reflect incremental clinical (and occasionally nonclinical) benefits; and, that prices would not be so high if middlemen, such as pharmaceutical benefit managers...
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