Drug Prices Negotiated by Medicare vs US Net Prices and Prices in Other Countries

Abstract

This study analyzes how prices negotiated by Medicare in the US compare with net prices before negotiation, ceiling prices, and list prices in 6 other high-income countries.

The Inflation Reduction Act instructs Medicare to negotiate prices of top-selling drugs and sets statutory upper limits (“ceilings”) on negotiated prices.¹ Medicare can negotiate prices below the ceilings based on how prices and clinical benefits of these drugs compare with those of therapeutic alternatives.^1,2 In August 2024, Medicare published the negotiated prices for the first 10 drugs selected for negotiation³; these prices will come into effect in 2026 and will apply to all Medicare Part D plans. We analyzed how negotiated prices in the US compared with net prices before negotiation, ceiling prices, and list prices in 6 other high-income countries.

Methods

We identified negotiated prices using a published list from the Centers for Medicare & Medicaid Services (CMS).³ We estimated 2021 net prices before negotiation as the difference between mean Medicare reimbursement per unit and discounts negotiated between manufacturers and insurers (eMethods in Supplement 1).⁴ We estimated ceiling prices as the lower of net prices or 25% reduction to the nonfederal average manufacturer price (40% reduction for drugs on the market ≥17 years) (eMethods in Supplement 1).¹ We extracted list prices in the other countries (Australia, Canada, France, Germany, Switzerland, and United Kingdom) from IQVIA’s MIDAS database, with non-US currencies converted to US dollars using yearly mean exchange rates.

Initial net prices, ceiling prices, and prices in the non-US countries were estimated with 2021 data, the most recent year with complete data. To allow for comparison, all prices were converted to 30-day equivalents, apart from prices for insulin aspart (cost per 100 IU) and ibrutinib (weighted cost per tablet or capsule across all formulations available in individual countries) (eMethods in Supplement 1). We calculated the percentage difference between the net and negotiated prices in the US and the mean ratios of non-US prices to negotiated prices.

This study was exempted from institutional review board approval because no data were collected from participants. Data were analyzed with R version 4.3.1 (R Foundation for Statistical Computing).

Results

Negotiated prices were 8% (dapagliflozin) to 42% (sitagliptin) lower than net prices before negotiation (Table). For example, the price of dapagliflozin decreased from $193.80 to $178.50 per 30-day supply; that of sitagliptin, from $195.60 to $113.00.

Table. Comparison of Treatment Costs Based on Prices Negotiated by Medicare vs Costs in 6 Other Countries.

Brand name	Active ingredient	Primary indication	Price, $									Mean ratio of non-US to initial net price	Mean ratio of non-US to negotiated price
			United States			Australia	Canada	France	Germany	Switzerland	United Kingdom
			Initial net price	Negotiated price	% Difference
Stelara	Ustekinumab	Crohn disease, psoriasis, psoriatic arthritis, and ulcerative colitis	7859.88	4695.00	−40	1341.56	1813.12	1219.92	2503.99	1729.97	1291.68	5.1	3.0
Enbrel	Etanercept	Rheumatoid arthritis	3571.61	2355.00	−34	754.42	1135.39	646.48	974.25	1176.51	851.93	4.0	2.7
Entresto	Sacubitril/valsartan	Heart failure	458.40	295.00	−36	138.89	181.91	156.61	150.36	145.12	117.91	3.1	2.0
Imbruvicaa	Ibrutinib	Chronic lymphocytic leukemia	385.71	257.37	−33	71.22	77.33	82.39	164.79	172.39	148.22	3.7	2.5
Eliquis	Apixaban	Nonvalvular atrial fibrillation	309.00	231.00	−25	57.13	80.37	63.84	68.66	82.23	68.59	4.5	3.3
Xarelto	Rivaroxaban	Nonvalvular atrial fibrillation	261.30	197.00	−25	51.22	70.71	58.68	86.38	86.41	65.00	3.9	2.9
Jardiance	Empagliflozin	Type 2 diabetes	251.70	197.00	−22	33.48	67.05	38.31	50.60	50.93	47.16	5.5	4.3
Januvia	Sitagliptin	Type 2 diabetes	195.60	113.00	−42	30.51	75.83	26.43	35.90	43.61	42.90	5.1	3.0
Farxiga	Dapagliflozin	Type 2 diabetes	193.80	178.50	−8	33.50	64.89	38.63	41.88	48.92	47.13	4.4	4.1
NovoLog/Fiaspa	Insulin aspart	Diabetes	12.95	8.96	−31	5.44	9.87	6.93	11.09	9.57	7.38	1.6	1.1

^a All amounts represent 30-day equivalents, except insulin aspart (expressed per 100 IU) and ibrutinib (expressed as weighted average price per tablet or capsule). Non-US currencies were converted to US dollars using yearly mean exchange rates.

For etanercept, ibrutinib, and ustekinumab, negotiated prices matched the ceilings, which were 33% to 40% lower than estimated net prices (Figure). For insulin aspart, the negotiated price was close to the list price of the product after the manufacturer (Novo Nordisk) introduced a price cut in 2024.⁵ For all other products, negotiated prices fell below the ceilings, with ceilings for 5 of the 6 drugs set at initial net prices.

Figure. Comparison of Treatment Costs Based on Prices Negotiated by Medicare, Initial Net Prices, and Ceiling Prices.

Drugs are plotted on separate panels because of differences in price ranges and units. All amounts represent 30-day equivalents, except insulin aspart (expressed per 100 IU) and ibrutinib (expressed as weighted average price per tablet or capsule). The manufacturer of insulin aspart (NovoLog) reduced the product’s US list price in 2024, which is shown for comparison.

Apart from insulin, which had a voluntary price reduction in 2024, all products remained more expensive in the US than in other countries (Table). For example, the price negotiated by Medicare for ustekinumab ($4695.00 per 30-day supply) was higher than prices in other countries, which ranged from $1219.92 in France to $2503.99 in Germany. However, the gap between US and non-US prices narrowed for all drugs.

Discussion

Reductions in prices associated with the Medicare Drug Price Negotiation Program differed widely across the 10 drugs. The negotiated prices of all products but 1 remained above list prices in peer countries. Study limitations include a lack of data on net prices in peer countries and use of indirect methods to estimate net prices before negotiation (relying on estimates of mean discounts across Medicare Part D and commercial markets).

CMS estimated that if negotiated prices had been implemented in 2023, net spending would have been reduced by 22%.³ This figure is likely an overestimate of savings associated with negotiation because manufacturers will not have to pay mandatory discounts to Medicare Part D for drugs selected for negotiation (which will instead be paid by CMS). Further research that accounts for these forgone discounts is needed to accurately estimate savings associated with the negotiation program.

Section Editors: Kristin Walter, MD, and Jody W. Zylke, MD, Deputy Editors; Karen Lasser, MD, MPH, Senior Editor.

Supplement 1.

eMethods. Further Details on the Approach Used to Estimate Net Prices and 30-Day Treatment Costs

Supplement 2.

Data Sharing Statement