How Prices for the First 10 Drugs Up for U.S. Medicare Price Negotiations Compare Internationally

This analysis was conducted with data from IQVIA, a U.S.-based company that collects international comparative pharmaceutical data and information made available by the Medicare Payment Advisory Commission (MedPAC), an independent congressional agency that advises the U.S. Congress on issues affecting the Medicare program.

In Exhibit 1, the basket of the 10 drugs eligible for negotiation are presented using a Laspeyres price index. This index gives us an idea of what spending in the United States would look like if other countries’ prices were applied to U.S. consumption and utilization for selected drugs using USD. Laspeyres indices are used in international drug-pricing comparison and are a standard in the field. Laspeyres indices are calculated by first determining the average price per unit in each country. This was done by dividing the total list retail sales by the number of units sold. Indices are then calculated with prices weighted based on consumption patterns in a base country, in this case, the U.S. The index for a given country was calculated as:

In this equation, p is the price of an essential medicine (i) in a comparator country (c) or the United States (US), and q is the corresponding quantity in doses.

Exhibit 2 shows estimated rebate amounts and net prices for Medicare Part D beneficiaries based on annualized 2021 retail prices pulled from IQVIA for the selected drugs. Sales figures were based on list retail prices, which were those charged by pharmacists to patients or insurers. These sales figures therefore reflected distribution chain mark-ups and, where relevant, value-added taxes. The sales data did not reflect confidential rebates and discounts.

Net retail price estimates rely on analysis of 2021 Medicare Part D prescription drug event and direct and indirect renumeration (DIR) data by MedPAC. The analysis identified therapeutic class information based on the First DataBank Enhanced Therapeutic Classification System. Estimated rebate percentages reflect rebates as a proportion of what was paid to a pharmacy by Part D plan sponsors in 2021. For therapeutic classes where a range was provided, the upper limit was used (anticoagulants, antihypertensive therapy agents, and disease-modifying antirheumatoid drugs), while for drugs where a rebate range was not provided, the minimum (diabetic therapy) or maximum (antineoplastics) estimate was used where appropriate.¹² When compared to prior research, estimates from MedPAC may present over- or underestimates as rebates for overall therapeutic classes represent negotiated rebates as a share of gross spending and are not specific to individual drugs.¹³

Exhibits 3 through 12 show list retail prices per dosage unit. List retail prices were calculated using annualized 2021 IQVIA invoiced sales estimates based on public prices in the U.S. and seven other countries. Unit prices were calculated using counting units where, for solid forms, one counting unit equals one solid form (e.g., one tablet), and, for liquid forms, one counting unit equals one milliliter of liquid (e.g., one ml syrup). Data for the eight countries were available at the pack level, meaning the number of counting units and price for a certain pack of a drug (e.g., x drug could be available in several different quantity packs within y country). Pack-level data account for differences in packaging and formulation (e.g., if x drug is available in 5mg and 10mg units) and thus provide generally more accurate unit prices, particularly when calculating the price index across countries. The final list retail prices shown in the exhibits represent the arithmetic mean of the price for one unit (whether tablet or liquid) across the different packs per country. For the purpose of this chartpack, standard 30-day supplies were not calculable and the selected drugs are instead presented at the individual unit level.

Across all countries in this analysis, including the United States, prices shown reflect list retail prices which do not include rebates and discounts. List prices reflect sticker prices for drugs before any discounts, in this case, retail prices for drugs before any discounts, rebates, or price concessions.¹⁴ List prices may be higher than the actual prices paid by insurers, though this is a limitation across international drug price comparisons as net prices are not available for all countries.

Based on the analysis presented in Exhibit 2, the U.S. bar in Exhibits 3 through 12 includes the estimated U.S. rebate for each drug and its associated estimated net price per unit. Net prices may present a better metric for drug affordability, but they do not account for uninsured patients who do not have access to many of the rebates negotiated by payers and, despite rebates to lower prices, patients may still face higher out-of-pocket costs when drug companies raise list prices.¹⁵ These exhibits also do not capture that, in many systems, even the net price is not what patients face across systems, as some patients pay either nothing or a limited copayment for their prescriptions.¹⁶ List prices are an important starting point for discount negotiations and are the only datapoints that can be systematically compared between countries. In the U.S. specifically, list prices can affect patient out-of-pocket costs for drugs, which are often calculated as a percentage of list price rather than net prices; increases in list prices in the U.S. have been found to correlate with increases in patient out-of-pocket costs.¹⁷

The authors would like to thank Anna Kaltenboeck, Aaron S. Kesselheim, and David Blumenthal for their review of this piece. The authors would also like to thank Jinru Wei for analysis of the IQVIA data. From the Commonwealth Fund, the authors would like to thank Lovisa Gustafsson, Munira Gunja, Arnav Shah, Gretchen Jacobson, Bethanne Fox, Rachel Nuzum, and Celli Horstman for internal review, and Aishu Balaji, Sam Chase, Chris Hollander, Paul Frame, and Jen Wilson for editing and formatting.