Brand-name prescription drugs add little additional therapeutic benefit

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Medicare is legally prohibited from negotiating prices with pharmaceutical companies, and as a result brand-name prescription drugs in the U.S typically cost two to three times more than in other industrialized countries. But what added value comes with those higher prices? Apparently not much, according to agencies in three countries that are responsible for evaluating the effectiveness of new drugs compared with existing options.

Researchers sought to determine the added therapeutic benefit provided by the 50 top-selling brand-name drugs covered under Medicare parts B and D. They did so by examining how the drugs were rated for safety and effectiveness compared with existing treatments by health technology agencies (HTAs) in Canada, France and Germany.

They found that across the three countries, 27 of the drugs, or 55%, were rated low for added therapeutic benefit by the HTAs. Those drugs account for more than $19 billion in annual estimated net spending, or 35% of Medicare net spending on the top 50 drugs and 11% of its total prescription drug spending in 2020.

Moreover, drugs with low added therapeutic ratings were prescribed to far more beneficiaries than those with high ratings (387,149 versus 44,869.) Drugs with a high added benefit rating had a median annual net spending per beneficiary of $32,387, compared with $992 per beneficiary among drugs with a low added therapeutic benefit rating.

Drugs with low added therapeutic rates were most commonly prescribed to treat endocrine disorders and respiratory diseases, the study found, while those with high added ratings were prescribed most commonly for cancer patients.

The authors explain that their findings could have important implications for future drug prices. The 2022 Inflation Reduction Act allows Medicare, for the first time, to negotiate with pharmaceutical manufacturers for a small number of top-selling drugs beginning in 2023. Seven of the drugs to be negotiated were among those rated as having low added therapeutic benefit.

“For those drugs, Medicare could ensure that they are not priced higher than alternative treatments that offer similar therapeutic benefits to patients,” they write, adding that in Canada, France and Germany “drugs that offer minor or no added benefits must be priced in accordance with or blow comparators to be granted coverage.”

The study, “Added Therapeutic Benefit of Top-Selling Brand Name Drugs in Medicare” appears in the April 18, 2023 issue of JAMA.