Incorporating Added Therapeutic Benefit and Domestic Reference Pricing Into Medicare Payment for Expensive Part B Drugs

Abstract

Objectives: Identify expensive Part B drugs and evidence for each drug's added benefit and model a reimbursement policy for Medicare that integrates added benefit assessment and domestic reference pricing.

Methods: A retrospective analysis using a 20% nationally representative sample of 2015 to 2019 traditional Medicare Part B claims. Expensive drugs were defined as having average annual spending per beneficiary exceeding the average annual social security benefit ($17 532 in 2019). For expensive drugs identified in 2019, added benefit assessments conducted by the French Haute Autorité de Santé were collected. For expensive drugs with a low added benefit rating, comparator drugs were identified in French Haute Autorité de Santé reports. For each comparator, average annual spending per beneficiary in Part B was computed. Potential savings from 2 reference pricing scenarios were calculated: reimbursing expensive Part B drugs with low added benefit at the level of each drug's (1) lowest cost comparator and (2) beneficiary-weighted-average cost of all comparators.

Results: The number of expensive Part B drugs grew from 56 in 2015 to 92 in 2019. Of the 92 expensive drugs in 2019, 34 offer low added benefit. Implementing reference pricing for these expensive drugs with low added benefit could have saved an estimated $2.1 billion if prices were set based on spending for their lowest cost comparator, or $1 billion if prices were set based on the weighted average of spending for comparators.

Conclusion: Reference pricing based on added benefit assessment could be used to address the launch prices for expensive Part B drugs with low added benefit.

Keywords: Center for Medicare and Medicaid Innovation; Inflation Reduction Act; comparative effectiveness; health technology assessment; high-cost drugs; launch prices.