Brand-name drugs sold in the United States are two to three times more expensive than in other countries, but many of the top-selling brand-name drugs may provide little added therapeutic benefit.
A new study led by researchers at Brigham and Women’s Hospital used public Medicare data to find the 50 highest-selling brand-name drugs in 2020 and evaluated their therapeutic benefit compared to existing standards of care.
Little added benefit
The researchers found that 27 of the 50 drugs received low added therapeutic benefit ratings from national health technology assessment (HTA) organizations of Canada, France, and Germany, despite comprising 11% of net Medicare prescription drug spending.
Most of the top-selling drugs were used to treat endocrine conditions including diabetes, cancer, and respiratory diseases. Data from HTA organizations were available for 49 of the drugs.
New price negotiation model
The Inflation Reduction Act of 2022 will for the first time allow Medicare to negotiate the price of top-selling drugs.
According to initial guidance released by the Centers for Medicare and Medicaid Services, negotiations will be heavily influenced by a drug’s comparative effectiveness against therapeutic alternatives.
The new study found that seven of the ten drugs likely to be selected for negotiation this September had low overall added benefit.
Opportunity for Medicare to stop paying excessively
The new model of price negotiation under the Inflation Reduction Act provides a great opportunity for Medicare to stop paying excessively for top-selling drugs that do not offer meaningful clinical benefits over less expensive treatments.
The team suggests that Medicare has many bases on which to negotiate so top-selling drugs are not priced higher than therapeutic alternatives.
Establishing a national HTA organization
The researchers suggested that the U.S. could benefit from establishing its own national HTA organization to determine therapeutic benefits.
Although ratings were not always available from all three countries, the therapeutic benefits of each drug were determined based on the most favorable HTA rating.
Extrapolating therapeutic ratings from foreign HTA agencies to the U.S. may not always be warranted.
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The study was conducted by Aaron S. Kesselheim et al and published in JAMA.
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