Options for CMS drug price negotiations

Date: January 4, 2023
Journal: Health Affairs Forefront
Citation: Voehler D. Ollendorf. D. Options for CMS drug price negotiations. Health Affairs Forefront. 2023 Jan 4

In 2026, the Inflation Reduction Act (IRA) will allow the Centers for Medicare and Medicaid Services (CMS) to negotiate the maximum price of certain prescription drugs on behalf of Medicare beneficiaries for the first time in the history of the program. While the IRA specifies the criteria for selecting drugs eligible for negotiations—brand-name drugs that do not have generic equivalents and that account for the greatest Medicare spending—there are no specific instructions on how these negotiations should happen.

There are a myriad of options available, each with advantages and disadvantages, but all share a common theme: They each attempt to tie the price paid in some way to how much a given drug improves health. Which option CMS chooses will affect not only near-term Medicare spending but also longer-term trends in drug research and innovation.

More Publications