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Medicare Drug Price Negotiation in the United States: Implications and Unanswered Questions

  • Sean D. Sullivan
    Correspondence
    Correspondence: Sean D. Sullivan, BSc Pharm, PhD, The CHOICE Institute, School of Pharmacy, University of Washington, 1959 NE Pacific Ave, Seattle, WA 98195, USA.
    Affiliations
    The CHOICE Institute, School of Pharmacy, University of Washington, Seattle, WA, USA

    Department of Health Policy, London School of Economics and Political Science, London, England, UK
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Published:December 08, 2022DOI:https://doi.org/10.1016/j.jval.2022.11.015

      Abstract

      The United States is a relatively free-pricing market for pharmaceutical manufacturers to set list prices at the product launch. Few drug price controls exist, and federal price negotiation as a policy has historically been politically untenable. After decades of debate on whether the federal government, specifically the Medicare program, should more actively manage drug prices, the US Congress passed legislation authorizing Medicare to directly negotiate prices with manufacturers. The purpose of this article is to describe elements and implementation of the price negotiation provisions and then comment on the potential impacts on payers, innovations, and the pharmaceutical industry. While impacting only a few drugs each year in the beginning, price negotiation in the Medicare program will have secondary and long-term effects in the US market and beyond. It is clear that in the United States, the Medicare market for drugs will no longer be a free-pricing environment in the industry.

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