CMS Drug Price Negotiations Complicated by Therapeutic Alternatives Clause

As part of the upcoming drug pricing negotiations from the Inflation Reduction Act, drugmakers will need to justify high US drug prices by comparing efficacy and value with therapeutic alternatives. The problem, according to industry leaders, is that the definition of therapeutic alternatives is unclear. Beyond that, these filings have a small max word count, making applications even trickier.

According to the authors, “The Inflation Reduction Act of 2022 does not define the term “therapeutic alternative. Nor does CMS guidance incorporate more commonly used or understood terms such as “pharmaceutical alternatives” and “therapeutic equivalents”—both of which are carefully defined by the Food and Drug Administration (FDA) with criteria meant to reflect the science behind the drugs and biologics they classify. As a result, the guidance fails completely in its primary goal of helping manufacturers understand the field of negotiation.”

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(Source: Health Affairs Forefront, June 5^th, 2023)