Navigating IRA Negotiations: Lessons from Round One and Strategies for Future Success.

Research Contributors: Scott Briggs, Partner – VPA Practice, Ethan Johnson, Principal, Alex Salomon, Consultant, Jasmine Wu, Associate Consultant

This is a preview of our latest whitepaper. Be sure to download the full piece below.

Our new whitepaper breaks down CMS’ approach to Maximum Fair Prices and offers pharma leaders a clear blueprint for future success under the Inflation Reduction Act.

ABSTRACT:

In August 2024, CMS announced the first set of Maximum Fair Prices (MFPs) under the Inflation Reduction Act (IRA), marking a major milestone in Medicare drug price negotiation. While headlines cited dramatic discounts, the true drivers of pricing outcomes are more complex. In this paper, Putnam unpacks the hidden forces behind round one decisions and outlines strategic imperatives for manufacturers ahead of future negotiation cycles.

Drawing on proprietary analysis, policy insights, and real-world evidence examples, the authors explore how CMS weighed therapeutic alternatives, clinical data, and non-clinical manufacturer inputs in shaping MFPs, and what this means for future rounds.

INTRODUCTION:

The IRA introduces a new pricing paradigm for Medicare Part D drugs, and the first round of negotiations offered an early view into how CMS is likely to apply the law in practice. The process revealed patterns in how therapeutic alternatives were defined, the types of data CMS prioritized, and which products were most vulnerable to price cuts.

In this whitepaper, Putnam experts review the key lessons from round one, including why certain drugs like Imbruvica saw steeper concessions, how Eliquis and Xarelto were compared, and where real-world evidence played a decisive role. We also share actionable guidance for pharmaceutical manufacturers on how to strengthen their positioning in upcoming IRA rounds.

Topics explored include:

• How CMS applied the MFP framework, including “ceiling price” rules and evidence weighting
• The role of market exclusivity, rebates, and therapeutic alternatives in pricing outcomes
• Best practices for shaping the competitive landscape and developing Medicare-relevant data
• Early considerations around Most Favored Nation pricing and international reference benchmarks

Download the full whitepaper