this is my title Frontiers in Health Affairs Articles published today With co-authors Darius Lakdawalla, Jalpa Doshi, Louis Garrison, Anup Malani, Peter Neumann, Charles Phelps, Adrian Towse and Richard Willke. This article begins by discussing the pros and cons of different methods for CMSs to set maximum fair prices (MFPs).
Among these options, we recommend the combination of generalized risk-adjusted cost-effectiveness (GRACE) and equivalent life-years gained (evLYG).
Using GRACE plus evLYG combines the three key factors mentioned above that CMSs must consider in a principled manner in order to comply with the non-discrimination principle of the regulation. The only tension between these methods and the CMS memo (p.50) is the latter stating that “CMS intends to use qualitative methods to maintain flexibility in negotiations.” We recommend limiting the qualitative analysis to only those considerations that have not been quantified by prior research. Applying a pre-specified quantitative approach to the remaining considerations can make the price negotiation process more transparent and predictable for both the patient population and the manufacturer.
More details are described in the full text, describing the rationale for this approach and the three-step approach to its implementation here.
