Exploring the Future of Medicare Drug Payment Policy: Highlights from ATI’s Recent Webinar

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AUTHOR – ATI Advisory


In the September webinar “Medicare Negotiation: What the first 10 selected drugs tell us about the program’s future,” ATI Advisory presented an extensive analysis of the initial 10 drugs selected by the Centers for Medicare & Medicaid Services (CMS) for upcoming negotiation under the Medicare program. 

This session, hosted by ATI’s Anne Tumlinson and Anna Kaltenboeck, a health economist and ATI’s Principal and Head of Prescription Drug Reimbursement Practice, delved into the nuanced economic effects of the Inflation Reduction Act and its payment reforms to Medicare. Kaltenboeck linked these economic effects with insightful forecasts regarding how pharmaceutical manufacturers might respond to Medicare negotiations in the coming years. 

Exploring Outcomes Through A “Public Benchmark”

Tumlinson emphasized ATI’s shared mission, stating, “Our purpose at ATI is making care better for everyone, and we do this by working to solve the hardest problems in healthcare.” In line with this mission, the discussion served as a platform for Tumlinson and Kaltenboeck to explore ATI’s thoroughly developed “public benchmark” – a set of criteria and data points used for evaluating drug pricing. 

With a robust array of data sources – including SEC filings, data from the Food and Drug Administration (FDA), and Evaluate Pharma and Omnium databases – ATI developed comprehensive profiles for each of the 10 drugs selected by CMS for future negotiations. Combining ATI’s expertise and resources, this benchmark provides an overview of crucial aspects to consider during negotiations, including each drug’s market tenure, Medicare usage, clinical development milestones, investment history, both global and U.S. sales figures, its role within the manufacturer’s portfolio, and past deal transactions. 

The Congressional Budget Office (CBO) placed estimated savings for Medicare over the next 10 years for 100 drugs at $100 billion. Kaltenboeck gave greater context to these savings, noting that total global revenue for the selected ten drugs alone amounted to $481 billion. Notably, $265 billion – accounting for about 55% – is generated solely from the U.S. market.

Understanding The “Incentive to Innovate”

Kaltenboeck’s presentation went on to explore the relationship between negotiation and manufacturers’ incentive to innovate. She explained, “When manufacturers need to replace the revenue from an aging blockbuster drug, they are compelled to invest in developing new drugs.” This insight sparked a dynamic conversation about the potential for lowering Medicare spending, the role of biosimilars (lower-cost alternatives to brand-name biologic drugs) in challenging brands’ market exclusivity, and the implications of rapidly introducing new drugs to the market at high prices that are not addressed by negotiation.

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