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cost burden on patients. Even where there are multiple competitors in an class of oncology medicines, branded prices remain stubbornly high. If insured, out-of-pocket costs are usually calculated as a percentage of the list price in which case the dollar amounts can be substantial. A $2,000 annual cap on out-of-pocket spending on outpatient drugs in Medicare will help alleviate the cost burden, as may Medicare drug price negotiations for a limited number of high-cost pharmaceuticals..
In peer nations outside the U.S. the prices of oncology medicines are heavily regulated. And we observe that a number ofby government payers if there isn’t sufficient clinical benefit to justify the price. Moreover, in international markets, outcome- or value-based pricing strategies for oncology pharmaceuticals are commonplace, which they aren’t in the U.S.However, in the U.S.
As a point of departure, the law establishes an upper limit for the negotiated MFP for each selected drug, either the current net negotiated price after rebates, or a percentage of the non-federal average manufacturer price. The specific percentage depends on the length of time a drug has been on the market since its FDA approval:
This is because at present rebates for cancer drugs tend to be quite low, which means the difference between list and net prices is relatively small. Part of the reason for small rebates for oncology therapeutics is the protected drug class stipulation. Medicare Part D plans are required to cover all pharmaceuticals in six protected classes or categories: immunosuppressants, antidepressants, antipsychotics, anticonvulsants, antiretrovirals, and antineoplastics.
Moreover, the MFP could impact the prices of competitors in the same therapeutic class as payers may cite the MFP as a benchmark. In turn this could lead to a possible reset of the “best price” provided to Medicaid and 340B entities. Medicaid’s best price policy requires pharmaceutical manufacturers to provide state Medicaid programs the best price it offers any other purchaser.
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