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Leaning into Real-World Evidence: Lessons from the IRA

By Mike Munsell and Meg Richards

Manufacturers are continuing to wrestle with the effects of the Inflation Reduction Act (IRA) on their business plans and revenue streams. Although some of the IRA’s impacts are still uncertain, real-world evidence (RWE) is an important tool for manufacturers navigating the road ahead, as it will help them demonstrate the value and comparative effectiveness of their treatments.

One of the IRA’s requirements is the Medicare Drug Price Negotiation Program, which allows Medicare to negotiate the prices of certain high-cost, single source drugs without generic or biosimilar competition. In September 2023, Medicare selected the first batch of 10 drugs for the program from among the top 50 covered drugs with more than a $200 million annual drug spend.

Once this list was announced, manufacturers had only one month to submit data to CMS to negotiate a maximum fair price for each drug. CMS was particularly interested in reviewing RWE and comparative effectiveness research (CER). CMS extended an initial pricing offer to these manufacturers on February 1, and manufacturers either accepted or proposed a counteroffer by March 2. Throughout the spring and summer, manufacturers will continue to meet with CMS to reach an agreement before the negotiation period ends on August 1.

The entire process runs on tight timelines, which is forcing selected pharma companies to rapidly generate relevant RWE. Even pharma companies that are not likely to be selected for the next batch of negotiations would be wise to improve their ability to conduct this RWE research as quickly and efficiently as possible.

Establishing benchmarks for relevant RWE

In the U.S., mandatory price negotiation is a new concept. Although Europe has strict price negotiation guidelines, the U.S. previously relied on an “honor system” in terms of demonstrating treatment value in a quantifiable way. From a business perspective, price negotiation cuts into potential profits for manufacturers. Medicare is focusing on drugs with no generic alternative that have been on market for a long time (more than nine years for small-molecule treatments, and 13 years for biologics). To secure the most desirable price point, manufacturers are using RWE to demonstrate as much value as they can for their treatments vs. competitors’ treatments.

CMS has hired pharmacoepidemiologists, health economists and outcomes researchers to help them review the evidence submitted and negotiate prices for these treatments. While CMS has said that it is looking for high-quality RWE relevant to Medicare populations, skeptics have said that the agency might not yet be in a position to recognize this type of RWE.

Whereas Europe has non-governmental agencies to assess the safety, efficacy, and patient value of treatments, no such agency yet exists in the U.S. Without the guidance of an independent agency, setting these benchmarks is an uncertain process.

Using RWE to demonstrate treatment value

While this first phase of the Medicare Drug Price Negotiation Program plays out, manufacturers can go ahead and harness RWE to demonstrate treatment value. Real-world data allows manufacturers to expand their comparisons, include high-cost outcomes such as hospitalization rates, and explore the sub-populations and vulnerable populations that CMS is giving more weight.

In the near term, pharma companies will benefit by conducting comparative studies that demonstrate the incremental effectiveness of their treatment relative to other options on the market. One example is Eliquis (apixaban), the number one drug on CMS’s 2023 list, and its comparison to Coumadin (warfarin).

As most of the treatments on CMS’s price negotiation list have been around for at least ten years, any effectiveness outside of clinical trials (and the original comparator) will need to be demonstrated with RWE. While patient experience and patient preferences must be considered, these important sources of data are not captured in administrative claims or electronic health records. Other mechanisms to assess the patient experience—such as surveys, patient-reported outcomes, and patient-generated biomarker data—are needed.

Using RWE to show the impact of access changes

CMS’s price negotiations may have indirect and unintended effects on patient access in the long term. Last winter, Medicare held drug price negotiation listening sessions on the listed drugs to learn more about the perceived value of these treatments from the patient, patient advocate, and prescriber point of view. One primary concern of each of these groups was the potential for increased barriers to access.

Lower treatment prices, coupled with structural changes to Part D, may shift the financial incentives of insurers, resulting in increased utilization management restrictions, the movement of treatments to higher formulary tiers, or even the exclusion of a previously covered treatment to limit payers’ financial risk. Just as RWE can demonstrate a treatment’s comparative effectiveness, it can also help manufacturers demonstrate the impact of potential access changes, including higher copays and the addition of step-therapy requirements, on patient outcomes such as treatment adherence, discontinuation, and overall healthcare utilization.

CMS is likely to consider this perspective in their negotiations, particularly given that concerns about access limitations were expressed in nearly every public listening session. Generating citable evidence that scientifically validates and supports the concerns of patients will likely prove advantageous.

Harnessing RWE to improve patient access

Manufacturers can easily access data and analytics for Medicare’s price negotiation program through Panalgo’s RWE solutions, which include the IHD Analytics platform in addition to streamlined access to real-world data, formulary data, and expert analytics services.

Analyses can be iterated in days rather than months, with documentation running in the background to produce a complete audit trail. Our solutions can also help you map the patient journey and determine the impact of treatment price on patient adherence and sales.


Explore our site to learn more about automating CER research with IHD Analytics or mapping the patient journey with MMIT’s real-world data capabilities. A version of this blog was previously published on the Panalgo site

© 2024 MMIT
Mike Munsell

Mike Munsell

Mike Munsell, PhD, is the director of research at our sister company, Panalgo.

Meg Richards

Meg Richards, PhD, MPH, is the executive director of solutions at our sister company, Panalgo.

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