Alternative Approaches for Valuing Multi-Use Drugs in Medicare Negotiation

This technical report discusses alternative methodologies for establishing maximum fair prices (MFPs) for multi-use drugs under the Medicare Drug Price Negotiation Program. It outlines the current CMS methodology, which utilizes a single MFP based on the utilization of different indications for a drug. The report identifies potential challenges with this approach, particularly regarding the undervaluation of newer indications and the disincentivization of manufacturers to develop additional uses for existing drugs. Three alternative approaches are proposed for consideration: weighting indications based on Medicare prevalence, incorporating clinical input, and addressing unmet patient needs. Each of these approaches aims to balance the need for innovation with the goal of improving patient access to medications. The report emphasizes the importance of CMS's methodology in shaping patient access and fostering innovation as the program evolves and more drugs with multiple indications are selected for negotiation.