For manufacturers, the Medicare Drug Price Negotiation Program created under the Inflation Reduction Act (IRA) presents new challenges, including navigating the criteria CMS uses for price selection, understanding the implications for their product portfolios, and responding to potential revenue impacts. As CMS released its guidance on the negotiation process, detailing the requirements and parameters for calculating the “maximum fair price” (MFP), manufacturers were under pressure to quickly interpret the new rules and strategize accordingly.

The Challenge:

CMS issued guidance that details the requirements and parameters for the Medicare Drug Price Negotiation Program which outlines CMS’s approach to calculating the MFP for selected drugs. The companies whose drugs were selected needed to quickly assess the impact of the guidance and report to their C-suite teams the key implications of the announcement in a timely fashion to develop potential strategies.

The Strategy:

Leveraging ADVI’s extensive advisor network, including several former

PBM and commercial payer network contract specialists, the team conducted a quick-turnaround analysis of each of the 10 negotiated drugs to gather insights into:

1. Market and stakeholder reactions to the MFPs
2. Potential differences between the current net price and the MFP
3. Key drivers behind each drug’s MFP (e.g. clinical superiority within each class); and
4. Potential outliers to CMS’ MFP methodology

The Results:

ADVI delivered an initial analysis of the MFPs within hours of the announcement, followed by a more in-depth assessment within days. This rapid turnaround enabled our clients to promptly brief their executives on the implications of the CMS guidance. Unlike other consulting firms that might require time to convene formal advisory boards or focus groups, ADVI leveraged its extensive advisor network to provide equally thorough analyses in a significantly shorter timeframe.