Implementing Drug Price Negotiation and Other Inflation Reduction Act Provisions

Through the Inflation Reduction Act, the Centers for Medicare & Medicaid Services (CMS) is implementing drug price negotiation to lower prescription drug costs for people with Medicare and reduce drug spending by the federal government.

With a 20-year history supporting CMS with such complex legislative changes as the Affordable Care Act, Medicare Access and CHIP Reauthorization Act, and Medicare Modernization Act, Guidehouse is a trusted partner with supporting policy decisions and promoting innovation. We also bring relevant experience across the health ecosystem, from Food and Drug Administration drug development to federal and commercial pharmacy operations and regulatory compliance. Our integrated public and commercial sector strategy, change management, IT and analytics, clinical, and program transformation experts help federal health agencies achieve their missions and sustainable success.

Read more about Considerations for Implementing Drug Price Negotiation.

Unintended Consequences

It is important to consider risks and unintended consequences associated with developing and operationalizing policies and procedures and establishing monitoring and reporting processes. Some specific considerations for drug price negotiation include:

  • Skyrocketing Drug Prices. Knowing that CMS will be negotiating for a lower price, the cost of drugs could be set at an initial premium for in-scope drugs. Or companies could increase the prices of other drugs to account for decreased prices on in-scope drugs.

  • Enforcement Driving Undesired Behaviors. If enforcement measures are designed to align behavior with desired outcomes, it is important to consider whether the behavior to achieve desired outcomes could have other implications.

  • R&D Funding Bias. Pharmaceutical companies may shift their R&D budgets from innovation to more frequently occurring disease types that align with in-scope drugs.

  • Public Perception. Pharmaceutical spend may be misinformed by a focus on list price instead of net price. As discounts offset an estimated 62% of list prices, the drug’s net price (price inclusive of rebates, discounts, returned goods, chargebacks, etc.) must be considered.


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For reference: CMS Implementation Timeline

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